Investment should not be the single goal of a founder
“-Can you tell me what you would look for in a startup so I can properly build my MVP?” I am at a Meetup where investors (VC’s mostly) sit around the table with Saas startups. Others are nodding at this question, it is the thing they want to know as well.
“-So what do you have now, right this moment?” Another investor asks. The founder, or rather intended founder explains that he is still playing with the idea but before he starts he wants a clear idea of what investors and VC’s in particular would look for in an MVP. He then intends to build an MVP to match these expectations and also wants to know from what point onwards he needs to contact the VC.
“-Does that imply you mean to build one single MVP based on what the investor expects rather than what a customer would want?” I ask the founder. He answers yes, he also does not know what other way there would be to start. In all of the examples he sees online he understands that there is some sort of MVP with which you gain the interest of an investor. He is not the only one. After the meetup another founder connected with me on Linkedin to thank me for the insight; ‘we need to listen to our customers’ rather than build for an investor. The rise in popularity of startups and the seeming ease with which to start one, has peaked the amount of people wanting to start a startup. Thinking that building an MVP is step one and getting investment is step two.
Being a founder is not easy, starting a startup is relatively easy, but proving, with actual customers, that your idea is actually something you can build a business on is hard, and it takes time. It starts by listening to your customers, figuring out what it is they need or want, than prove that your solution is something that really helps them and makes them happy. The next step is to prove that people will pay you for that, and the last is to prove that there is a possibility to scale.
It doesnt make sense to get an investor in if you haven’t proven the viability of your idea yet. You can put your own money in it, or bootstrap, maybe there are friends that want to help you. Ask yourself why you want to have an investor? Is it the goal of your startup? Or is the goal to actually build something that people will buy. An investor will want to see return on her investment, so think about that when and where looking for an investor makes sense for your business, if at all. But always prove your idea has a healthy business model first. Are you looking to build something that is a healthy business but not something you want to scale big, maybe you do not need any investment at all, or just some starting capital from friends or Angels. If you are looking to scale big, then investment makes sense, but only in the phase where you have proven the problem, the solution, and the revenue promises.
Esther Gons is the award-winning author of The Corporate Startup & Innovation Accounting. Winner of the 2022 Golden Axiom Business Book Award, 2019 Golden Axiom Business Book Award, and the 2018 Management Book Of The Year Award. She is an expert in Innovation Accounting, Innovation Strategy and Portfolio Management.