THE RISE OF NEW FOUNDERS AND THE CHALLENGE OF BUILDING AN INVESTABLE MINIMUM VIABLE PRODUCT (MVP)

If you have recently flipped through the pages of any business newspaper or paid considerable attention to today’s financial activities, you would have noticed a trending topic; there has been a spike in the number of start-ups being put together to compete. A large amount of cash is flowing in, fundings have swelled, technological innovation is exploding, and venture capitalists are continually looking to invest in the next big thing.

There is a substantial increase in the number of people who want to become entrepreneurs because the start-up landscape has changed in favour of these would-be founders. There are more opportunities; in fact, many young entrepreneurs are viewing every market with an eagle’s eye. They identify sectors that require problem-solving and quickly devise ways to establish scalable solutions. Not only that, they strive to create a niche for themselves in the market.

Undoubtedly, the coronavirus pandemic can be said to be one of the notable factors to have unleashed a tidal wave of entrepreneurial activity across the world, and today, young entrepreneurs and start-ups are transforming ideas into disruptive global businesses.

In Africa, recent reports by the Boston Consulting Group break down the expansion and maturation of African tech start-ups. The report describes how fertile the environment is for young tech entrepreneurs and reveals ways they can take advantage of it.

Another report by Financial Times aimed at countries that have experienced a boom in entrepreneurship shows the number of applications for start-ups in the United States. As at July 2020, that number reached its all-time high of 551,657, a 95% increase compared to the same period in 2019.

In countries like France, it has been reported by McKinsey that 84,000 new businesses were registered; a 20% increase and a historical maximum in comparison to the same period in 2019.

While there has been an increase in the number of companies that are registered, new founders are also coming into the picture day in-day out.

Every aspiring entrepreneur/founder wants to succeed like Bill Gates, Jeff Bezos, Mark Zuckerberg, and more recently, founders of ground-breaking companies such as Glossier, Discord, Clubhouse, and others. But there is one thing they must understand. Founders who have succeeded have one thing in common: they understand that the needs of their customers are crucial to their businesses than anyone else in the market — that’s what sets them apart from their counterparts.

For founders to understand their customers, some pertinent questions must be answered. The questions include the following:

·???????What’s the stated and unstated need of the customer?

·???????Does your idea satisfy the needs of the customer?

·???????What methods should be employed in validating your ideas?

If entrepreneurs aren’t asking themselves these questions and seeking ways to answer them, there is a big issue on the ground.

Many people are venturing into all sorts of businesses right away, convinced that they can lead their start-ups to success in silos. But the truth is that without a strategy, there are greater chances of failure. Thus, founders must recognize that there is money, time, and other factors at stake, and that whatever decisions are made must be driven by logic and market rationality rather than emotion.

That’s where the concept of the Minimum Viable Product (MVP) development comes into the picture.

What is an MVP?

MVP is a development technique in which a new product is introduced to the market with its basic features. This product is good enough to get started on but is too rudimentary to get the attention of its target consumers at scale.

The term “MVP” was first introduced?by Frank Robinson in 2001 and stands for “Minimum Viable Product”.

As opposed to the old approach to developing products, using an MVP enables start-ups to see if what they offer is what their potential users are looking to buy or use.

A great example of a start-up that distilled a clear MVP for its market is Twitter, whose initial MVP was a simple SMS platform that allowed people to send a text to a single number and would text broadcast this to a group of friends. With this simple idea, it has grown into a platform people use to share their opinions with the world.

Founders globally are doing all in their power to build a minimum viable product; unfortunately, there are several challenges they face during the early stage of establishment.

With a general outlook, we have identified some of the challenges founders face when building an investable minimum viable product.

1.????Market and consumer research

It is common to find founders jump right into creating a solution without validating the initial problem. They get caught up in their idea and, without realising it, build the product within an echo chamber. Truly, anyone can come up with a great idea, but having a solid understanding of how that idea fits with the market and validating that idea against one’s target market is critical.

When thinking about building a product fit for the market, kicking off with the market in mind is always best approach.

What is the first step in achieving an investable minimum viable product?

Usually, the ideal step is to hold conversations with likely users of the product, rather than settling for validation based on theories and assumptions. Founders are frequently faced with this challenge, and it is one they must find a solution to because it is critical in designing the right product for a target audience.

2.????Planning Issues

Building an investable minimum viable product requires time, resources, and money. Failure to get the planning right from the onset before starting the MVP or conducting consumer and market research can pose a challenge for start-ups. A waste of time can cause money and resources to become volatile and unpredictable leading to a delay in project completion.

So, how can proper planning help realise an investable minimum viable product?

What planning does is help founders establish a structure for an investable MVP. It also clarifies the duration for which a product will be built and the amount of money and resources required.?

3.????User Engagement

Often, when start-ups are building a product, they place user engagement as an afterthought. It is only when the product has been developed that they consider the user’s input. However, by this point, it could be too late already. The reason is that leaving involvement up until the last minute can set the whole process back if the user experiences difficulties in understanding what the company is trying to achieve with the product.?

To avoid such confusion, user engagement must be incorporated throughout the building process or, even better, before the process commences.

4.???Resourcing

Resourcing poses challenges when it comes to managing projects. When building an investable minimum viable product, it can be very difficult to balance resourcing correctly. We find that too many bad or too few of the right resources can prove to be the problem of many products. However, it is wise for start-ups and founders to note that efficient resourcing can save the day when money and time become sensitive.

It is the one factor that can push your product in the right direction.

To concisely summarise this article, building an investable MVP isn’t the only solution to the problems founders and start-ups encounter, but it is a crucial part of achieving success. As such, it is only when building an investable MVP is done right that it becomes valuable and potentially scalable.?

If you are looking at building your product MVP and need support reach out to [email protected]

?

References

Shah, J. (2019, December 10) 5 challenges of building an MVP

https://bitsul.co.uk/

Kauffman, G. (2016, August 5) why entrepreneurship is on the rise

https://www.csmonitor.com/

Holtz, L. and Golubski, C (2021, June 23) the figure of the week: The rise of African tech start-ups

https://www.brookings.edu/

Casselman, B. (2021, August 19) Start-Up Boom in the Pandemic Is Growing Stronger

?

https://www.nytimes.com/

Altun, Y. (2021, April 9) Pandemic Fuels Global Growth of Entrepreneurship and Startup Frenzy

www.forbes.com

?

Wasserman, N. (2008, February) The Founder’s Dilemma

https://hbr.org/