Today’s question comes from Vinay and deals with funding. Specifically, where do you get the money to build your app if it’s still in the idea phase?
At Launchpeer, we focus only on startups and we get a lot of entrepreneurs who are just starting and trying to figure out a roadmap. Funding is an important part of that.
1. Determine which features are “must have” vs “nice to have”
The first step is figuring out which features are “nice to have” but not critical to launching.
A good way to think about this is from the standpoint of your ideal customer. A lot entrepreneurs start too broadly, thinking about every feature a user could possibly want. When you focus on your one ideal customer, it’s easier to narrow down that list of what is required for an MVP.
For example, make a list like this:
My ideal customer is:
- 25-30 years old
- they’re launching their first startup
- they have a day job making $60k-$80k
- they’re probably married, but don’t have kids yet
- they live on either the East or West Coast
- they love to go to Starbuck
That may seem ultra specific, but you need to that level of detail in order if figure out the most important features of your app. Additionally, if your ideal customer is not similar to you, you need to go out and talk to them.
1a. Refine your list into an MVP
Once you have your list of “must have” vs “nice to have” features, filter your list until your down to the bare minimum. In other words, features without which your app cannot launch. The goal here is to define a true MVP (minimum viable product).
2. Is it possible to accomplish your goal without building the app?
The goal here is to create something that solves the immediate pain of your ideal customer, but doesn’t require you to build a full app. With b2c startups, this is a lot harder to do, but it’s often very possible with b2b apps.
But isn’t the whole point to build an app? Not necessarily. Or, at least, maybe not in the beginning. If you can solve your customer’s core pain with a website or a very minimal application that you can build yourself (or build very inexpensively), then you can use that as a testing ground to learn even more about your customer. The is a great way to get started and work up to the app you eventually want to build.
3. Pitch investors
What if it’s still not enough? What if your MVP is still something that can’t be done in a small or inexpensive way? This is where investors come into the picture.
First, don’t be discouraged by all the stories you read about startups raising insane amounts of money. Raising money is hard. And it’s especially hard if it’s your first time. That said, there are some things you can do.
- Create a pitch deck
Pitching to an investor is going to require at least a very clear idea of:
- what your product is
- the problem it solves
- who it’s for
That’s why all of this was preceded by the steps above. But once you have that, you’ll need a pitch deck. At Launchpeer, we think of pitch decks like high school degrees. They don’t really change anything, but if you don’t have one, or if it looks really bad, it can really hurt your chances.
We created service specifically for helping you make your pitch deck the best it can be. Check out GradeMyPitchDeck.com. We’ve seen a dramatic increase in success rates by using a service like this.
- Build a prototype
Think of your pitch deck like the specs to a car. It may be the most impressive thing in the world, but a test drive is always going to be better. Especially as a first timer. Without a track record behind you, investors are going to be more skeptical. And if you have a prototype that gives them the “touch and feel” experience, you’re chances of getting funding are much higher.
- Raise enough money
You need to raise enough money to cover a runway of at least 12 months. And your product development costs should only be a third of that. Most of that money will go toward execution (salaries, marketing, etc).
The last part of this is how to find investors, especially if you don’t live in Silicon Valley.
Well, we made something specifically for you at FindMyStartupInvestors.com. We know it’s not easy and that’s why we made this product. We’ll get some info from you and match you with a list of investors specifically suited to what you’re trying to build.
That’s if for today. We have entire episodes planned about finding investors and raising money, so be on the lookout for those.
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