How to Develop a Minimum Viable Product That Raises Money for Your Mobile App?
You might have a great product idea in mind. An idea that could change people’s lives or make it better. But only if it was that easy to turn an idea into reality! Developing a product costs money, and not all businesses have the capital to get their idea off the ground. This is where MVPs come in extremely useful. By designing a Minimum Viable Product, businesses can test their idea with real users and raise funds for further MVP development if the idea kicks off.
Statista reports that 25% of apps aren’t used after the first time. Imagine developing an app for the users only for it to get abandoned by them later! Building an MVP minimizes this risk factor to a significant extent. It is an excellent way to validate your business idea without spending a hefty sum of money.
In today’s blog post, we will walk you through the concept of MVP, how to build an MVP, its benefits for investors, and how you can raise funds for it from investors.
What is an MVP?
A minimum viable product or MVP is a product comprising minimal features and is built to check whether the product would actually be liked by the intended users or not once a full version of it is rolled out to them. In addition to helping businesses validate the product idea early in the product development life cycle, building an MVP allows them to obtain the crucial feedback of the users which can be of great value during full-fledged product development.
How Does Building an MVP Help Attract Investors?
MVP development offers ample benefits that can help you raise funds from investors for further product development. Here’s how-
1. Investors can check the product’s viability
The reason why MVP is developed in the first place is to test whether the product is viable, i.e. whether there is a demand for such a product and whether are users willing to pay for it. For investors, an MVP provides a way to assess whether the product has the potential to succeed in the market.
2. It allows investors to see the team’s potential
A great product has a great team behind it. And investors understand this very well. A strong team carries the potential to succeed despite multiple challenges that arrive in the journey while a weak team is likely to fail no matter how good the product idea is.
It is because of this reason that many MVP investors consider looking at the potential of the team before committing to the project. They would likely give it a green signal if they feel that the team behind it has the necessary skills and experience to succeed.
We, at Dew, have 12+ years of experience in building products that can instill confidence in investors to invest in the product. So, if you want to raise funds for your project, make sure that you partner with a proficient MVP development company that can help you create an MVP that is liked by investors.
3. Investors would likely invest if the product is of value
If investors like your idea or vision and how you are aiming to solve a real-world problem through that product, they would most likely invest in it. If you don’t build an MVP and just show the product in its early development state, it would be quite challenging to sell it to investors as they may not be able to realize the potential of the product.
4. Investors can see if the team is aware of the market
Market analysis plays a crucial role in the MVP development process. When investors realize that proper market research has been conducted for that product, they have the notion that the team is aware of the market conditions and has the capability to adapt to any changes that it may have to go through. Furthermore, building an MVP allows investors to see the market opportunity and potential ROI.
How to build an MVP?
MVP development requires careful planning and effort, but it’s not a very complex process. Here’s a step-by-step guide on how to build an MVP-
1. Conduct market research
The primary step of the process is to perform thorough market research. This will help you understand the demands or needs of your target audience and what they’re looking for in a product. This can include conducting interviews, surveys, etc.
2. Identify your target market and form user personas
This point refers to identifying the demographics of your target market and what their needs are. Several questions, like
Who are the target users? What are their needs? Why would they use this product? need to be addressed in this step. This will help you find the right audience for your minimum viable product and build the right solution for them.
3. Identify key features
The third step of building an MVP is outlining the product’s key features. Always remember less is more when it comes to developing an MVP. Focus on the most important features first- the ones that will address the needs of your target users.
4. Build and launch your MVP
Once the above three steps are covered, you can proceed with the development and launch of your MVP. It might be a product with minimal features but ensure that it offers a great user experience. Put simply, it should be user-friendly.
In addition to this, collect feedback from users. A minimum viable product will have some flaws. There’s no denying it. Obtaining user feedback will allow you to look at the areas of improvement and help you understand what features to add or remove during full-fledged product development.
Now that you know how to build an MVP, it is now time to discuss how to raise investments for your MVP.
How to find and persuade investors after you have developed an MVP?
If you have built an MVP and are now looking for potential investors, here’s what you need to do.
1. Research potential investors
It is quite a task to raise funds for a new product even if it shows promising signs. But you must conduct thorough research on potential investors. Once you have shortlisted a few, find out their MVP investment history and analyze how and on what basis they invest in projects. A product that aligns with their interests is more likely to get you the funding you want.
2. Prepare a pitch that resonates with the investors
By this, we mean emphasizing those aspects of your product that can appeal to investors and focusing on the growth of the product.
Let’s say you are building a food delivery app. In that case, you may want to focus on the growing on-demand booking or delivery trends. Additionally, you can highlight how such apps tend to retain customers in the long run.
This will make investors feel secure about their investment and suggest that you have the ability to launch the product successfully.
3. Make them believe that the product has potential
While pitching your MVP (and what you have envisioned) to potential investors, try to make them believe that the product holds great potential to succeed in the market and possesses the ability to grow in the future. The key is to convince them that their investment will pay off.
4. Prepare yourself to answer every question
Investors will throw many tough questions at you after you pitch your product; be prepared to answer them. Also, be very honest about the associated risks and challenges.
For example, if you are pitching the idea of a new food delivery app, investors may raise questions regarding the competitive landscape, the scalability of your business mode, and the potential for customer attrition. Being honest and transparent about the associated risks will strengthen your chances of securing the MVP funding.
5. Have a clear plan of how you are going to use the funds
Be very clear from the beginning about how you will be utilizing the funds you are seeking. Because it is not just about raising funds, it’s also about how effectively those funds are used. Make sure that you are aware of your burn rate and have enough capital to sustain your business in case you are not able to raise funds in the future.
Summing Up
Developing a minimum viable product is a reliable way to acquire funds for your product. By following the above strategies and practices, you will be able to build a product that will resonate with investors and help you to secure the funds for full-fledged product development.
Do you know that brands like Uber, Airbnb, and WhatsApp started as MVPs and now are the most successful companies in the market? So, don’t hesitate in seeking out investors for your MVP. It’s time to build a great product and impress potential investors.
Originally published at https://www.dewsolutions.in on November 14, 2022.
