How to create an MVP: steps to create a minimum viable product to attract investment in a startup

Creating an MVP for a startup is a great way to test your business idea without spending a lot of money. By designing and building an MVP (Minimum Viable Product), startup companies can test their concept with real users and raise money to further scale and develop the startup’s technology product.

These days, most entrepreneurs and startups have a business idea to create a product or service, but usually don’t have the necessary capital to make their idea a reality. This is where MVP (Minimum Viable Product) comes in handy . In the review, we will look at the steps on how to create an MVP and what are its advantages for startups and investors. We will also discuss how to raise money from investors with a working MVP.

What is a minimum viable product (MVP)?

The minimum viable product is a concept taken from the Lean Startup methodology. The idea is to launch a product with as few features as possible in order to get feedback from users as quickly as possible. And also to test the idea of ​​a product in the early stages of its development life cycle.

• Simply put, an MVP is a version of an application that gives users value and a startup gives user insights. This is the first step to ensure the success of a startup project.

Let’s say you have a food delivery app and you’ve analyzed that there is a problem that your target audience is facing. Now you expose the solution as a feature in your application and run it on some members of your target audience to see first if it’s a problem and second how they react to your proposed solution.

The idea behind creating an MVP is that with it, a startup gets an idea of ​​how users are accepting its features before releasing a fully working application to the market. Undoubtedly, the presence of an MVP solution is logical and beneficial for a startup to reduce risks, save money and receive funding.

Benefits of developing an MVP for a startup

Developing an MVP for fundraising provides the following benefits:

• Investors can see the functionality of the product.

When it comes to product development, having a minimum viable product goes a long way in securing investment funding. Because it allows startup investors to see the functionality of the product and how it can be used to solve a real problem.

In addition, MVPs help develop consumer-facing products because they allow you to collect feedback from real users and incorporate it into the final product. In short, MVPs are an integral part of the product development process and should not be overlooked when seeking investment.

• It is easy for investors to understand if a product is viable.

The main goal of an MVP is to test how viable the product is in the market. This means that you need to check if there is a demand for the product and if users are willing to pay for it. MVP also allows you to get feedback from users, which can be used to improve the product before it goes to the general market.

With a minimum viable product, startups can reduce the risk of failure and increase their chances of success. For investors, the MVP is very important because it allows you to evaluate whether a new product will be successful. This information is extremely important when making investment decisions.

• Investors can judge if you have the right team.

As any seasoned investor knows, one of the most important aspects of any new startup is the team behind it. A strong team can make even the most difficult project successful, while a weak team is more likely to fail, no matter how good the basic idea is.

This is why many MVPs place so much importance on seeing a minimum viable product before committing to a new project. Developing MVP applications makes sure that the team behind a startup has the necessary skills and experience to succeed.

• Investors will be able to see what you want to do.

Many investors are reluctant to invest in new products or companies because they fear that the team behind the project will not be ready to see it through to completion. However, a minimum viable product allows companies to assess investor interest in a product and obtain funding for its further development. The cost of creating an MVP is usually less, the risks are less than with traditional product development.

The minimum viable product also allows you to collect customer feedback and make the necessary changes before launching a full product. By demonstrating their commitment to the product, a startup MVP can improve their chances of getting funded and succeeding.

By developing an MVP, startups can prove their market awareness

Since market analysis is an important part of MVP development, it also helps investors ensure that the startup team is well aware of the market and is able to adapt to it. The minimum viable product is very important when looking for investments because it allows start-up companies to test the hypothesis of their technology product with real customers and get feedback to validate a working business idea. This feedback is necessary to refine and improve the product and business model before reaching out to investors to fund a startup on a large scale.

The minimum viable product is also a proof of concept that investors can use to evaluate market opportunities and potential return on investment. An MVP is a key step in getting funding from investors and proving market awareness.

Initial steps for creating an MVP

Creating an MVP requires some planning and thoughtful effort, and this process should not be neglected. Consider the initial stages of creating an MVP:

• Conduct market research

The first step is market research. This will help you understand the needs of your target market and what they are looking for in a product or service. Many paid survey platforms can help you find the right respondents for your business MVP.

• Define the target market and user persona

After conducting market research, it’s time to define the target market and user persona. This includes determining the demographic characteristics of the target market and its needs. To do this, you need to answer various questions.

Who is your target user? What are their needs? Why would they use this solution?

The main rule of creating or developing an MVP is to know whose problem your startup is targeting (what problem it solves).

Regardless of what your application is, focus on one category of users with their set of problems. If you start mixing user personas, the MVP won’t be able to do its job. For a clearer goal, keep them separate.

• Outline the main characteristics of your product

Now that you know who your target market is and what their needs are, it’s time to map out the key features of your product. This includes identifying the core MVP features your product or service will have. Remember that when creating a minimum viable product, less is better than more. You should focus on the core features that will satisfy the needs of your target market.

Creating and launching an MVP

Once you’ve decided on the list of features, it’s time to create and run an MVP. This means developing a real product or service and delivering it to the target market. When launching a minimum viable product, it’s important to focus on creating a great user experience. This means that the product or service must be easy to use and provide a high level of comfort.

• Required MVP Features

When you’re building an MVP, it’s easy to get carried away and confused between which features to add – the ones that tell users the purpose of the app, or the ones that set you apart from the rest? The answer is no.

This is where you fight between what your users want and what they need. Although what they want may be too much, they need what should underpin the MVP of your application.

• Release and keep testing

After adding minimum viable features to an MVP, the next step is to release it to the market and see how people react to it. Then keep adding/removing features and testing the market.

• Analyze reviews

It is also important to promote your minimum viable product and get feedback from users. The feedback you receive will be invaluable as it will help you determine which features to add or remove.

Analyzing reviews will help you understand what works and what doesn’t and how you can improve your product or service. It is important to remember that the minimum viable product will have flaws and there will be areas that need improvement.

Now that you know all the steps involved in an MVP, how do you make sure that what you’re doing will give you the best results? How to make sure that even after creating an application with calculated functions, it will make sense for users?

There are three common methods that developers follow when creating an MVP – User Stories, Design Sprints, and Lean Canvas. But when developing your MVP, you can find many more alternatives. So implement the ones that best suit your purpose. Let’s talk in more detail about 3 methods of creating an MVP:

Design Sprints

The design sprint is one of the most time-limited processes used when building an MVP. This process uses prototyping, design, and testing of ideas while eliminating the build and launch phases to reduce the risk of bringing a new service, product, or feature to market.

Here’s how an MVP is built with design sprints

Map the problems and choose an area to focus on;
Sketch solutions on paper;
Turn decisions into hypotheses;
Creation of a solution prototype with high accuracy;
Test it on users.

Creating an MVP based on user stories

You know that the only way to create an app that is used and loved by millions is to create value for users. You can’t offer an experience when you’re too feature-focused. Features don’t create value. Features tied together in sequence create experience and value.

But how to create an MVP based on user stories?

• Notice and bookmark all the different user stories that end up appearing in your app.
• Rank the stories by difficulty and value. To do this, use the help of focus groups or your intuition.
• From high-priority stories, isolate those that need to be developed, and work your way up to a level where only those features that need to be developed remain.

Lean canvas method

The method follows a typical Lean Canvas business model. The idea is to analyze the user story using 9 defining blocks, which can also be thought of as a checklist. And any feature that is eliminated at the end becomes suitable for MVP.

Here are nine blocks:

The main problem;
Possible solutions to the main problems;
Your USP;
Your competitive advantage;
The target audience;
Key areas of measurement;
Channels through which you can reach the client;
List of variable and fixed costs;
Your source of income.

There is no one-size-fits-all answer to building an MVP, but the steps above will give you a good starting point. Remember, the goal is to create a minimum viable product that meets the needs of your target market.

How can a startup find investors after developing an MVP?

In today’s economy, it can be difficult to raise money for new products, mobile apps, or services, even if it’s a great idea. One way to increase your chances of success is to carefully study potential investors. This means not only knowing the history of their investments in startups, but also understanding their goals and objectives.

By pitching the MVP in a way that aligns with their interests, you’re more likely to get startup funding upfront. In times of economic downturn, it is even more important to know the needs of potential investors. They may be more conservative with their money and risk averse than during periods of economic expansion.

Focus on the future, not the past

When presenting your product to potential investors, it is important to focus on the future, not the past. This means highlighting the potential of your product and its ability to grow in the future.

For example, if you are introducing a new social media app, you should focus on the potential user base and how the platform can be used to bring people together. The main thing is to convince investors that your product has the potential for successful development in the future and that their investment will pay off.

Create a presentation that resonates with potential investors

The presentation should focus on those aspects of your product that are most likely to resonate with investors, highlighting the potential return on investment.

For example, if your product is a food delivery app, you can focus on the growing trend of online ordering and fast delivery. You can also highlight the potential for repeat customers and customer loyalty to companies that offer convenient delivery options.

This can give investors confidence that you can successfully launch the product. By creating a pitch that resonates with potential investors, you’ll be in a better position to raise the money needed to bring your product to market.

Be prepared to answer tough investor questions

When presenting a minimum viable product to potential investors, be prepared to answer tough questions. This means being honest about the risks and challenges a startup has with your product.

For example, if you’re introducing a new food delivery app, you should be prepared to answer questions about the competitive landscape, customer churn, and the scalability of your business model. If you are honest and transparent about the risks involved, you will be in a better position to get startup funding.

Optimize your startup’s cash position

Before presenting your MVP to potential investors, you need to optimize your startup’s cash flow. This means that you need to be clear about your ROI and make sure you have enough cash to sustain your startup business in the event that you can’t raise investors’ money by introducing them to an MVP.

It is important to have a clear plan for the use of the requested funds. This will give investors confidence that you can successfully launch a startup and grow your business.

Questions and answers about MVP

Creating an MVP is the most important step in the process of raising money for a startup. Create a product that will resonate with investors and help raise the funds needed to take your startup to market.

• Does a startup always need an MVP to get funding?

While an MVP can be a useful tool for attracting investors, it is not always necessary. In some cases, a well-designed prototype may be enough to demonstrate the potential of a startup and convince investors to fund it.

However, there are situations when an MVP is simply necessary. For example, if a significant investment is required to launch an application. In this case, MVP may be the only way to convince investors to provide the necessary capital. Ultimately, whether an MVP is needed to get funding depends on the specific startup situation and the type of product being developed.

MVP funding allows the team to build a prototype or beta product that can then be tested with customers. If the product is received positively, it may receive additional funding to help it reach its full potential. However, it is important to understand that if the MVP does not impress investors, the idea of ​​funding a startup may be cancelled.

• How to present an MVP to an investor?

When introducing an MVP, it’s important to keep a few things in mind. First, it is designed to solve a specific problem or satisfy a specific need. This means that your proposal should focus on how your MVP will solve that problem or need. Second, an MVP tends to have very basic features and functionality.

This means that you should focus on simplicity when presenting your app. Finally, MVP development is usually much faster and cheaper than traditional application development. This means you can bring your app to market quickly and cost-effectively. Keeping these points in mind will help ensure that your MVP presentation is professional and effective.

• What is an MVP in business?

In business, MVP stands for Minimum Viable Product. This is the initial version of a product or service created to test a business idea with minimal resources and effort. The goal is to test the concept with customers and collect feedback to improve the product before making a big investment. MVPs are often used in the technology industry when launching new websites or applications.

• How long does it take to build an MVP?

On average, the creation of an MVP takes about 3-4 months, but these terms may vary depending on the complexity of the project, the necessary initial resources, the technologies used in product development, and the requirements of the industry and business.