Large number of great startups fail as they are not able to secure enough funds to reach their objectives. However, is funding so critical for success? Suppose you have a great business idea and a team supporting the cause, working tirelessly to perfect the product. In that case, there are specific methods to market your product and create disruptive value for millions of users across the world.
Irina Lebedeva has been a Product Manager in tech for over a decade. A Sustainable Development graduate, she now specializes in launching new ventures, quick go-to markets, and for the last three years is passionately involved in blockchain and crypto projects. She is also a serial entrepreneur and an immigrant who has launched many successful projects despite being continuously rejected by venture investors.
Have a great idea. How do I make it a reality?
The process begins with an overall strategy. When you establish correct goals and have the necessary resources to achieve them, your chances of success are pretty high, even if you have to sway from your original idea somewhere down the line. In short, it all comes down to two factors: creating a Minimum Viable Product using as little development resources as you can and being able to land your first clients with a minimal budget. This can be achieved by utilizing strategic partnerships, for example, which can help you stay independent from VCs and Angel Investors, who are often quite demanding when you acquire their support. Closing a round of investment can persist from 6 to 12 months, and most projects fail to get funded altogether.
“If you are a female founder and an immigrant who doesn’t have a record of success in this country, your chances are basically zero.”
Fortunately, this does not imply your project will not succeed! Quite frankly, you will be much better off utilizing these 6 to 12 months of developing the initial version of your product and landing your first clients or users. Afterward, VCs will approach you themselves when you get your metrics right by having a product that is already in high demand.
Minimize development costs in the first version of the product
Minimizing development in the early stages largely depends on each individual product. When it is a service, you don’t need to develop anything; you need to focus on onboarding the first clients and then scaling it. For example, you can use existing functionals of Instagram and Whatsapp to provide consultations or educational services. Quite often, there is no prerequisite to creating a complicated platform or mobile app; you simply need a landing page where, for instance, your potential clients can put in their contact details.
“A product is a tool, so the development of the MVP is not your end goal, focus on the cash positive business instead, and your happy customers are at the core of it.”
Let’s say you are adamant that the mobile application is the correct solution. The good news is, you don’t have to develop it firsthand! All you need to do is create a clickable design in Invision and show it to your first users. Afterward, use the design and positive user feedback as an MVP to get funding from Angels Investors. You can have a perfectly designed app for less than $2k if you utilize outsource designers. On the contrary, developing an app will require at least 6 months instead of 1-2 months when focusing on sales with a simple prototype. With proper testing, the app can cost you a debilitating $200k.
“Investors do not care how much money you have spent developing your prototype, but they eagerly invest in successful, scalable businesses!”
My product is quite complex. How do I simplify the costly development?
First of all, you need to understand if you actually need a platform. Perhaps a landing page/chatbot could suffice for an MVP.
“The more applications you have, the more complexities you create, which can backfire once you start testing the product on real users.”
Simply put, if you can, you should involve no more than one full-stack developer for the prototype.
“When it comes to mobile applications, a single native iOS developer can develop both the interface and simple backend using Firebase, like we did in the case of our Swan intermittent fasting app, for example. Firebase can help you develop even complicated functionality like social media without any backend. You can have one person doing the design, frontend, and back end thanks to a native interface.”
The following vital point is that you should focus on what truly matters. This will make your product more sustainable in the long run. At Teamkraft, a social sports app, a decision was made to develop a system that could track and verify user reputation across sports and countries using blockchain technology. At that time, a large chunk of companies were developing their own non-fungible tokens to launch collectible items. Unfortunately, this process cost them millions of dollars and at least a year to develop a prototype whilst hiring the world’s most expensive developers.
“Instead, we decided to keep things simple and start by storing hashes of data on the blockchain, which would make it immutable and verifiable.”
Using blockchain as a database was significantly less time-consuming than developing, for example, an ERC-721 token, and also proved to be much cheaper. This allowed Teamkraft to have a prototype ready in a few months without any additional developers and finances. Because the transaction costs were much lower, it allowed making the startup much more sustainable.
“You can build applications without hiring an army of developers if you simplify your prototype by focusing on what truly matters to the consumer and eliminate the noise.”
The prototype is ready. What’s next?
Marketing is one of the most daunting aspects of early-stage projects. Prototypes require thousands of dollars, but marketing costs can approach millions. This is why optimizing the marketing costs is one of the core skills of Founders and Product Managers.
“At Xfinite, which is a crypto entertainment platform, Netflix on the blockchain in other words, we didn’t start the acquisition of users with raising millions of dollars through private sale or ICO like what other blockchain projects did. The product itself started with developing strategic partnerships, including a partnership with Eros Now, one of India’s major media companies with over 220 M subscribers, and scaling to over two dozen international content partners even before we got any blockchain development done.”
Yes, you can build an outreach of millions of users even if you do not have any marketing budget.
All that sounds awesome, then what are venture capitalists for?
Once your product is ready and the number of customers or users starts scaling, you can start talking to VCs and Angel Investors. You now have all the data for them to be able to assess your product in terms of valuation and future cash flow.
“At this point, you have all the possibilities of getting funded no matter who you are, where you come from, what projects you have completed in the past. This might not sound like a shortcut, but this is one of the very few concrete methods of building a successful venture project even if you have no access to financing. You just need to believe in yourself and your small team. Think outside of the box, stay focused, control your costs, and put your customers first: success will follow!”