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Funding before or after MVP?

We are going from idea to design of a new booking platform for beauty services. I have been approaching possible funding sources, and so far, only been told to come back after MVP. I hear this more and more, but my co-founder thinks its possible to get founding before because its a spin off of his current (successful) company. How hard is it to get funding before MVP? And how would I go about it? Or should I wait till after MVP? (not to waste time or burn bridges)

21 Replies

3
0
X
Entrepreneur
Depends on the founding team. If you've had a successful exit or two, you might be able to get your idea funded. If not, your rule of thumb is to go looking for funding when you no longer need it to exist, only to accelerate.
Andy Terrel
2
0
Andy Terrel Entrepreneur • Advisor
Fashion Metric CTO , NumFOCUS President
It is definitely possible to get funding before MVP. I look at funding like an onion. Every validation you make for the investor is like a layer of the onion. The fewer layers, the closer to the core idea they get.

An MVP is one such validation for investors. Others include team, opportunity, and competition. Have an amazing proven team that has made investors money in the past, no MVP needed. Have an idea that fits an investors needs so soundly that other companies are licensing before any code is written, no MVP needed.

In the end it's all a sales job, and an MVP does eliminate one barrier for the investor.
Neil Licht - HereWeAre
1
0
Want To find-close Business Online without competition Before They Google Search? We solve this problem 1(508)-481-8567
Rene, I come to you and say

  • "Rene, I've got this great idea for a product/service. I know can sell well. It does ( verbalexplanation). I'd like you to invest!"
  • You'd say-"Invest in what? Show me the product. Have you researched the concept and know its something yourmarket wants and will buy?"
  • I say to you "Rene, its only a concept right now but I know it makes great sense for what it does"

Rene you know you'd say NO I won't invest.

Enough said I hope re the answer to your question.

Bryan Brewer
4
0
Bryan Brewer Entrepreneur
Startup mentor, educator, and entrepreneur advisor; focus on helping companies raise investor funding.
Whether or not you have an MVP addresses only the business stage of your company. Sometimes you can get funded before MVP, sometimes not. It mostly depends on the other factors investors look at: your business model, market strategy, management team, and the deal. If you are strong in all these area, then you have a better chance of getting funded.

Take the free Minimum Fundable Company Test -- which covers all these factors -- to get an idea if you startup is investor ready. www.mfctest.com
Martin Omansky
1
0
Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
If investors come in early, they will likely take your socks, underwear, and equity. Sent from my iPhone
Celeste Ruberti
2
0
Celeste Ruberti Entrepreneur
Independent Colorist and Stylist
I'd be interested to know what your product does differently than the existing booking platforms already available. Switching to a new booking platform is a huge undertaking for any business. StyleSeat and Schedulicity do it well, although IMO are missing out on opportunities. I'm wondering how you will compete with them.
Rene Joergensen
1
0
Rene Joergensen Advisor
Board Member
Some good advice and points here, thanks.

@ Celeste: we are launching in Canada, where there is practically no competition at present. Later, part of the expansion strategy is a focus on emerging markets, and then we want to compete by adding more value. True, StyleSeat is a good platform, but you can go a lot deeper into solving customer pain and improving the booking process. E.g. one pain point is the inconsistency in quality, and here we will be adding new things as a true buyer-picked platform. Besides innovation, my partner runs an online marketing company, so we would not only compete online but also supply users with new clients, something StyleSeat doesn't really do. Either way, its a double digit growth market with a lot of opportunity and room for improvement, and since this will be a spin-off of my co-founder's business, we are not afraid to enter or compete.
John Seiffer
3
0
John Seiffer Advisor
Business Advisor to growing companies
Nowadays it's fashionable for investors to want to see traction before they invest. Yes, there are fashions in the investor world - they just don't always tell you about them.

W/out traction an MVP won't get you investor money. An MVP doesn't have to actually mean a product. Go re-read Lean Startup. MVP is a learning vehicle to learn what customers want to buy. It can be (and has been) everything from paper mock-ups, to video explanations, to actual working prototypes. But it's purpose is to learn what customers want to buy AKA traction.
Roman Semenov
0
0
Roman Semenov Entrepreneur
Web development, Mobile development, Outsourcing
I've met both situations but I would recommend you to focus at MVP development. You'll spend less time and money to prepare product beta than to fund nothing. Try to include only few key features into MVP, do it based on ready solutions and fast techs in development.

What kind of technologies do you use? Maybe here is opportunity to save expenses for MVP version development.
Tom Beirith
0
0
Tom Beirith Entrepreneur
Director at POINT DUME (HK) Limited
It's funny, but I actually know someone in this very same industry (Spas) in Hong Kong who is trying to do the same thing - unsuccessfully. They also have actual brick and mortar locations but it did not help them. Most investors will see this as two completely different businesses (which they are). Just because you are successful as a Pizza maker in your own restaurant, doesn't mean you can compete with frozen pizza companies in the supermarket.
On fundraising: in my personal experience it depends on which group you are after. If you are looking for angel funding, your likelihood of securing it pre-MVP is higher than with seed / early stage VCs, who will be asking for something tangible they could "touch". Your chances of getting pre-MVP funded by someone who already has some experience in the relevant industry and shares your vision, are also much higher.
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