Differences Being Funded Before MVP and After MVP


More and more people are getting into business these days. About 472 million entrepreneurs worldwide attempt to start 305 million companies each year, according to this report. Of which, 100 million new businesses are launched. But to succeed and make profit, it takes a brilliant business concept, product or service. Let alone an effective marketing strategy.

Speaking of product development, it takes a lot of time, effort and most of all – money to get started. Entrepreneurs also run the risk of creating a product that their target customers will not patronize. For this reason, many business owners make use of a product development strategy called minimum viable product (MVP).

MVP refers to any product that contains just enough features to satisfy customers. The goal is to get the business going and then seek feedback from customers for further product development. This strategy prevents the possibility of creating a product that their target customers will want. It helps entrepreneurs learn as quickly as possible, particularly about the ins and outs of their product – it’s strengths and weaknesses and how it can be improved so the customers will buy it. It is important to have an MVP because about 95 percent of new products fail.  But of course, to develop an MVP, you need money. A business cash advance online is a great way to address your financing needs. But in addition to debt investment, you should also consider looking for investors to grow your business.

Should you get funded before or after developing an MVP?
The most common question of entrepreneurs is whether to get funded before or after an MVP. To help you decide, we’ve rounded up the pros and cons of each.

Advantages of being funded Before MVP

  • Motivation to start working harder on the idea and make the product.

The moment investors hand their money to you, you already have an obligation to make your business work. And that’s a real pressure. But at the same time, it makes you more motivated to develop your idea and turn it into a top-selling product.

  • Have the financial resources to start building the app or product.

Building a product, even just a prototype, requires money. For example, if you want to develop a mobile app, you will need to hire computer programmers, testers, and engineers to translate your idea into a viable product. It should cost you between $20,000 to $30,000 to create an MVP mobile app, depending on the scope of work. Unless you are financially prepared, you will need to get funding to support your product development as early as possible.

  • You can start earning profit.

The moment you start selling your MVP, the sooner you could earn profit and ultimately grow your business. This will give you much more capability to invest further on research, product analysis, and feedback gathering so you can create a top-notch product equipped with all features that your customers are willing to buy. 

Disadvantages of Being Funded Before MVP

There are also some risks associated with getting funded before establishing an MVP.

  • There is just an idea not tested.

It can be difficult to find investors when all you have is an idea that has not been tested yet. To get their big ‘yes’, you have to show them that your product will sell.

  • Investors prefer to see or test in what they are put money.

Investors are entrepreneurs too. They just don’t invest to help small startups like you to realize their dreams. They also want to grow their money! Investors prefer to see or test in what they are put money before they grant funding.

  • Without traction an MVP won’t get you investor money.

Investors need more than video explanations, presentations, and a solid business plan.

Advantages of Being Funded after MVP

  • There is a prototype which makes validation high.

Creating an MVP before seeking funding makes it easier on your part to obtain investors’ approval because you already have a prototype that is necessary for market validation.

  • It is trustfulness sign.

With an MVP on hand, it is easier to gain the trust of investors because they already have idea whether or not your product will grow and make profit.

  • You can ensure revenues.

Because you have a product that has features to satisfy customers, you know you could start making money right away.

Disadvantages of Being Funded after MVP

  • Possibility of the idea and the product aren’t matching.

When you initially submit your business proposal prior to creating an MVP, all you had was an idea. But along the way, this idea can change and it is possible that your product does not match your original business concept.

  • Risk of having an MVP that’s not what customers want.

This could spell disaster if you are unable to profit and make your investors’ money grow.

  • Investors may not like it.

You may have exhausted so much time and effort on your MVP but there is a possibility of potential investors not liking it in the end.

It is possible to get funding before or after creating an MVP. But they both come with certain pros and cons. Depending on your business idea and your determination to really pull it off, you can either look for investors before or after you establish an MVP and set your business up for success.

Author’s Bio
Lidia Staron has been working as a writer, editor and literary coach for 5 years. She contributes articles about the role of finance in the strategic-planning and decision-making process. You can find really professional insights in her writings.