In their respective fields, Facebook, Instagram, Zoom, Tinder, Uber, TikTok, and Spotify are among the major players of today. Their applications are multifunctional, feature-rich, and designed to provide an immersive user experience. It wasn’t always the case, though. These industry-leading platforms once had rudimentary UI/UX designs and minimal features.
For example, on February 4, 2004, Mark Zuckerberg unveiled Facebook, the well-known social media platform, as a minimum viable product (MVP) designed to create a social network among Harvard University students. Compared to the feature-rich platform we use today, Facebook’s MVP had far fewer features in its early stages, such as User Profile, News Feed, Friend Request, Photo Album, etc.
This social media platform began as an MVP and expanded over time, adding more features and functionalities to increase its reach. Facebook currently boasts one of the biggest user bases on social media, with over 2.99 billion active users each month.
Facebook’s growing market size is evidence that developing a minimum viable product (MVP) is an excellent, low-cost method of gauging the viability of a business idea. Businesses can test their ideas with actual users and make the necessary revisions before releasing the final version by designing and constructing an MVP. Without a doubt, having an MVP solution helps you secure funding, lower risk, and save money.
Do you think the idea has potential, but you’re not sure how to develop an MVP for your company? This is a step-by-step guide to assist you in creating a profitable MVP that can attract investors.
Let’s take a brief look at the many advantages that this crucial stage of mobile app development presents before talking about the MVP development process.
- The Top 4 Advantages of MVP Development to Draw Investors
- Real World Examples of Companies that Started with MVPs
- How to Build an MVP?
- What is the Price of Developing an MVP?
- How Can You Find Investors to Fund Your MVP?
- Types of Funding Partners for MVP Fundraising
The Top 4 Advantages of MVP Development to Draw Investors
The use of MVP development by startups has increased dramatically in recent years as companies of all sizes—from startups to large corporations—have come to understand its many benefits. Because of this, the MVP development stage of the product development process has proven to be extremely important, especially when looking for MVP investors. Discover the top four advantages that guarantee a fruitful product launch and attract MVP investors.
Investors Have Access to Product Features
The minimum viable product framework is necessary for product development in order to obtain investment funding. It enables MVP investors to view the functionality of the product and how it can be applied to address a practical issue. However, it can be very difficult to convince investors to invest in a product that is still in the early stages of development because they might not be able to recognize the product’s potential.
Additionally, because MVPs enable real user feedback and use it to improve the product before launching it to a wider market, they help ensure that products are developed with the needs of the customer in mind. Making a complete product before requesting MVP funding from investors requires this input. Additionally, MVPs help startups attract MVP investors and boost their chances of success by showcasing their dedication to the product.
Investors Have the Ability to Guarantee the Product’s Marketability
Testing if the product is viable in the market is the primary goal of MVP app development. It entails determining whether there is a market for the product and whether consumers are willing to pay for it.
MVP increases the likelihood of success and lowers the risk of business failure because it is open to user feedback and modification. An MVP gives investors a way to determine whether a product has a chance of succeeding, enabling them to make confident investment decisions.
Investors Depend on Your Group.
An astute investor is always aware that the team is what makes any new endeavor successful. No matter how great the underlying idea may be, a weak team is likely to fail. Conversely, a strong team can turn even the most difficult project into a huge success. This is the reason why, prioritizing the minimum viable product, investors often check it off the list before investing in a new project.
An MVP development that is successful guarantees that the team behind the project has the expertise and experience needed to be successful. Thus, in order to convince even the most dubious investors to fund your new project, make sure you collaborate with a reputable MVP development company like Appic Softwares.
For example, our enthusiastic team developed the JobGet job search app, which brought the whole hiring process to mobile devices—from identifying qualified applicants and employers to setting up interviews and more. We also used AI technology to make the job search process time- and location-efficient. Consequently, the duration of a job search via the app was slashed from days to minutes. It enabled JobGet to secure a whopping $52 million in funding and rise to the top of the blue-collar worker recruitment app rankings.
Investors Can Assess Your Team’s Knowledge of the Market
An essential component of developing an MVP app is market analysis, which tells investors that your team understands the market and can quickly adjust to changing conditions. For instance, conducting research on your competitors, your product’s main objective, advantages, and distinctive features are all necessary for creating a successful MVP.
Investors are aware that developing an MVP involves a great deal more work, planning, and investigation than creating a standard pitch deck. They are aware that you will not invest precious resources in its development unless you are familiar with the market. Therefore, creating an MVP shows that you have a thorough understanding of the market, which will assist you in winning over investors.
21 Effective Ways to Validate Your Minimum Viable Product is a book you might enjoy reading.
Let’s go through the process of creating an MVP now that we are aware of the advantages it offers investors.
Real World Examples of Companies that Started with MVPs
Numerous real-life examples exist of business titans who entered the market with an MVP and went on to become well-known brands that we encounter on a daily basis. These well-known companies all began with a minimal viable product.
Stanford University students had a brilliant idea in 2011 to create a social media platform that would let users post content that would vanish in an instant. Thus, they created Picaboo, the Snapchat MVP, which enables photo posting. It was very popular with young people. Following a few prosperous years, Snapchat expanded its functionality to include 10-second videos, Stories, and Chat. More than 363 million people use Snapchat every day worldwide.
Understand the development costs of a social media app such as SnapChat.
Two low-income men in San Francisco made the decision to host guests on the upper floor of their apartments. They created a basic landing page for their website MVP, complete with their housing photos, in order to market their business idea. Its main goal was to find out if guests were interested in making reservations for the apartments, which they were.
Find out the price of developing an app similar to Airbnb.
The differences between Uber’s MVP and full-fledged application are immediately apparent. The co-founders of Uber, Garrett Camp and Travis Kalanick, were frustrated by the high cost of San Francisco taxis and came up with a business idea to link iPhone users with cab drivers and allow credit card payments. To determine whether passengers were prepared for a novel taxi experience, they created an MVP. With a $95.58 billion market valuation as of right now, Uber is ranked 152nd out of the most valuable companies in the world.
Find out how much it costs to create an Uber-like app.
How to Build an MVP?
In order to validate your app idea and get user feedback, building an MVP entails a methodical approach and strategic planning to create a basic version of your product with essential features. This input guarantees that your finished product will be successful and refined. This is a detailed how-to for creating an MVP that will attract investors:
Perform Market Analysis
First and foremost, market research must be done before developing an MVP. It will assist you in comprehending the dynamic demands of your target consumer base and the features they value in a good or service. Numerous platforms carry out paid surveys and can assist in identifying the ideal respondents for your business’s MVP.
Determine Which Market to Aim for
Finding your target market and user persona is the next stage. It entails determining the target market’s demographics by posing a number of questions to yourself, such as:
- Who is the intended user?
- What requirements do they have?
- Why would they apply what you’ve done? And so forth.
Once all of these questions have been answered, it will be simple to decide who will use your MVP and what needs it should meet.
List the Main Features of MVP
Now that you are aware of your target market’s needs, it is time to list the essential components of your offering. It entails figuring out what the essential features of your MVP solution and services are. Recall that when it comes to a minimum viable product, less really is more. Therefore, you should limit your attention to the features that are most important for meeting the needs of your target market.
Construct and Release the MVP
After the features list has been established, you can begin developing and releasing the MVP. An MVP development company can work with you to create a product that is easy to use and distribute to the intended audience. Getting user feedback for value enhancements and promoting your minimum viable product are also part of this step. The input you get will be very helpful in figuring out what features to include or exclude, as well as how to make your product or service better.
Examine the Comments
It’s time to evaluate user feedback after launching a minimum viable product to determine what is and is not working. Recall that a minimum viable product will have shortcomings and room for development. But the information and comments you get will help you improve your product and ultimately create a fully functional, feature-rich version for the final consumer.
Although there isn’t a single, universal method for creating an MVP, following the steps listed above will provide you with a solid foundation. Recall that the primary objective of creating a minimal viable product is to draw in investors. Why invest your hard-earned money, time, and resources in a project that will ultimately fail if your product is unable to draw in investors? Keeping that in mind, let’s learn how to manage your MVP project and find investors.
What is the Price of Developing an MVP?
After learning the procedures for creating an MVP, an important query that comes to mind for an entrepreneur is how much it will cost to develop it. If you don’t consider the important factors, developing an MVP may still be very expensive, even if it costs less than developing the entire app. Depending on a number of variables, developing a minimum viable product can cost anywhere from $15,000 to $150,000 on average. These variables include, but are not restricted to, the industry you are in, the complexity of the product, functionality, UI/UX design, and the location of the MVP development team. As a result, it is crucial to take into account all of the different aspects of MVP software development.
An MVP for a food delivery app or website, for example, may cost between $42,000 and $51,000, an MVP for a video-calling app may cost between $30,000 and $50,000, and an MVP for real estate may cost approximately $45,000.
Investors find MVPs appealing because they are generally less risky and cost less to build than traditional product development. Please feel free to contact with our helpful team and discuss your product idea in order to receive an accurate estimate of the cost of developing an MVP application.
How Can You Find Investors to Fund Your MVP?
When developing a project, an entrepreneur’s top priority is figuring out how to raise money. Here are the steps you should take if you have created a minimum viable product and are now seeking for investors.
Studies on Investors
Even with fantastic ideas, financing new applications, services, or products can be difficult to come up with. Conducting extensive due diligence on possible investors is one way to improve your chances of success. It entails being aware of their MVP investment background and comprehending their goals.
Presenting a product that fits their needs increases your chances of getting MVP funding. In addition, it makes perfect sense to be cognizant of the requirements of possible investors during a recession. Compared to boom times, they may be more prudent and risk-averse during this phase.
Pay Attention to the Future
It’s critical to concentrate on the future rather than the past when presenting your product to possible investors. It entails emphasizing your product’s potential and future growth prospects. When pitching a new social media app, for instance, you should concentrate on the app’s prospective user base and how users will interact with one another on the platform. In this case, persuading investors that their investment will be profitable and that your product has the potential to succeed in the future is crucial.
Make an Appealing Pitch to Investors
Making a strong pitch that appeals to potential investors is the next step after you have compiled a list of them. It entails concentrating on the elements of your product that are most valuable to potential investors and highlighting the realistic return on MVP investment.
For instance, you should concentrate on the expanding trends of online ordering and delivery if your product is a food delivery app similar to KFC. Additionally, you can draw attention to the possibility of returning customers and their allegiance to companies that provide convenient delivery choices.
It gives potential investors confidence in your ability to successfully launch the product. You can increase your chances of raising funds for your mobile application by creating a pitch that appeals to potential MVP investors.
Have Questions Ready to Answer
You need to be ready to respond to any questions your potential investors may have when you present your minimum viable product. It entails being forthright about the dangers and difficulties connected to your product.
For instance, you should be ready to respond to inquiries regarding the competitive environment, the possibility of customer attrition, and the scalability of your business model if you are pitching a new food delivery app similar to Pizza Hut. You will have a better chance of obtaining MVP funding if you are open and truthful about the risks involved.
Boost Your Cash Situation
Ultimately, before you approach possible investors with your product, it’s critical to maximize your cash position. It basically entails knowing exactly what your burn rate is and making sure you have enough cash on hand to keep your business running in the event that you are unable to secure funding. It’s also critical to have a well-defined plan for how you intend to use the money. Investors will have more faith in your ability to successfully launch and expand your company.
Types of Funding Partners for MVP Fundraising
Although developing an MVP app is an essential first step for any business, it’s not the end game. Let’s examine the primary MVP funding sources that are beneficial to approach during the pre-seed and seed funding rounds in order to grow your company and attain long-term success.
Financial Institution for Community Development (CDFI)
Numerous CDFIs make investments in companies located in low- to moderate-income (LMI) areas. Even though economic development is their main priority, they also make investments in companies that will boost employment and the economy. They can therefore be a useful source of funding for initiatives aiming to start in LMI communities.
Governmental Organizations and Initiatives
Numerous initiatives and rewards are provided by the federal, state, and local governments to encourage economic growth and entrepreneurship. These may consist of grants, loans, and other types of financial support.
Investors in angels and venture capital
High-net-worth individuals frequently invest in early-stage companies in exchange for equity as angel and venture capitalists. Although their primary focus is on rapidly expanding businesses, they can also provide funding for minimum viable products that have significant potential.
Using a large number of people to contribute small amounts of money, crowdfunding is a method of raising capital. If an MVP has a compelling story and can attract interest from potential investors, it can be a good source of funding.
Family and Friends
Friends and family can also be very helpful in MVP fundraising, especially if they think you can succeed and support your business idea. Keep in mind that by investing in your business, they are also taking a risk, and you ought to handle them the same way you would any other investor.
In 2024, developing a Minimum Viable Product (MVP) and obtaining funding will require a calculated combination of creativity, painstaking planning, and skillful execution. Entrepreneurs can position themselves for success in a changing and competitive landscape by adhering to the steps outlined in our guide. In 2024, as the entrepreneurial landscape evolves, creating a compelling value proposition and focusing on adaptability will make it easier to build a successful MVP and attract investment.
Moreover, if you are looking for a fuel delivery app development company that can help you with the development, then you should check out Appic Softwares. We have an experienced team of developers that can use all the latest technology and can develop an app.
So, what are you waiting for?