In the world of bold startups, a fatal trap exists: attempting to build everything concurrently. Ultimately, founders may throw away thousands of dollars on a product that turns out to be worthless in the long run.
To avoid this common shortcoming, professional software teams focus on building a minimum viable product at reasonable costs, while keeping their startup ideas on track with current timelines. The truth is that even the most promising startups strive to optimize their tech stacks and development models.
If you are keen on making your startup stay afloat, clarity is paramount. Here is a step-by-step guide that involves basic terms on startup funding.
A Phased Approach and Its Intricacies
Today, reputable software companies maintain a phased approach: Prototype, MVP, and MLP. Despite being straightforward, this concept begs a question: Which format is likely to instill faith in investors? Let’s get to the core of the matter, with practical applications in mind.
1. Prototype: Embracing the Bigger Picture
Roughly speaking, a Prototype is a “draft” of your future product, with the aim of showcasing its strengths and prospects. This could be, for instance, a set of collaborative mockups in Figma, simulating the app’s behavior in practice.
Why is it necessary: To test UX/UI hypotheses and present an early-stage investor (Pre-seed) with what the ultimate solution will be like.
Investor’s motive: A prototype proves that you possess a full grasp of the product’s logic and validates a plethora of ideas on this journey.
Development timeline: 1-3 weeks.
Case study: A MedTech startup debuts an app for deciphering test results using AI. Before writing intricate code, a clickable prototype is generated. For the meeting with an angel investor, the prototype of the client observing their results will be attached. Certainly, these steps guarantee the first $50,000 for MVP development.
2. MVP (Minimum Viable Product): Testing Viability
An MVP stands for a Minimum Viable Product. Simply put, it’s a working version designed to solve clients’ main bottleneck. Unlike a prototype, an MVP has a backend, a database, and real value.
Why is it necessary: To test whether customers are ready to welcome the product. In this particular case, an MVP can be used for gathering raw data, not just guesswork.
Investors’ motive: At the Seed round, investors scan so-called MVP metrics (Retention, CAC, LTV). For them, this serves as a reliable proof of market demand (Market Fit).
Development timeline: 2-4 months.
Case study: A warehouse automation service may serve as a great example. Instead of acquiring a system with integrations for every CRM system, a skilled development team launches an MVP that scans a QR code and updates inventory in an Excel spreadsheet. If at least ten warehouses purchase this subscription, the idea is viable.
3. MLP (Minimum Lovable Product): Winning Hearts
In an oversaturated market, a plain working product (MVP) is a drop in an ocean. Instead, it can be replaced with an MLP, which stands for Minimum Lovable Product. Here, the focus shifts from “it works” to “users are delighted with its operation.”
Why is it necessary: In hypercompetitive environments like meditation apps or neobanks, where everything resembles one another, MLPs are implemented through impeccable design, micro-interactions, and emotional attachment.
Investors’ motive: Commonly, MLPs show signs of viral growth. As investors observe users turning into brand advocates, this process cuts down on the long-term cost of acquisition (CAC).
Development timeline: 4-6 months.
Case study: A language learning app startup is the right choice to illustrate the theory. If you stick to an MVP, your future app will simply display flashcards. If you go for an MLP, there will be gamification available, with a cute assistant character, and tactile feedback for right answers on top. Consequently, users won’t just learn new words; instead, they will become hooked on the interface.
How to Secure Funding in Simple Steps
Bear in mind that potential Investors allocate capital into risk mitigation.
If your market is brand-new: Go for an MVP. Shareholders expect to find people in search of a quick fix.
If you’re entering a ’red ocean’ (a market with tons of competitors): Build an MLP. Just another food delivery app won’t generate profits. For lenders, seeing why users switch from giants to you is pivotal.
If the technology is too complex at core (DeepTech): Start with a PoC (Proof of Concept) or an elaborate prototype that is technically feasible.
The Bottom Line
There is no such thing as a flawless product at all. A prototype proves that you are aware of what you’re doing. An MVP demonstrates that the market requires your creation, and MLPs prove you can capture this market on the spot.
To secure your startup funding and expand your business, launching an imperfect MVP today can be perceived as better than endlessly polishing an MLP until the market takes off.
