In our efforts at 249Startups to connect high potential growth startups with local and international investors and strengthening the investment ecosystem and culture in sudan , We have launched series of articles where we will be summarizing important concepts around ideas evaluation , MVP development and investments to better help entrepreneurs prepare more to meeting investors .
And, with the 2nd 249Startups Investment Demo Day approaching, we are preparing for showcasing this year portfolio of startups to angle investors , accredited investors and corporate to link high growth startups with funding .
How to evaluate start-up ideas?
How to choose what idea to pursue and when it is time to move in a different direction, how to evaluate progress and improve the business ?
Beginning with defining the startup as it’s a company that is designed or created to try to grow very quickly.
Startup idea is a hypothesis, it’s constructed within a pitch which included explanation about the problem, solution and the insight.
Start-up: a company that is designed to grow very quickly. Investors are mainly interested in evidence that your business can grow very quickly
Investors look for ideas and startups that are designed to grow fast. Entrepreneurs need to construct their pitching to show why the problem, the solution and insight fit fast growth.
A start-up idea is composed of three parts, the problem (why it will grow quickly), the solution (what is your experiment), and the insight (what about your experiment makes it specifically successful?)
- A good problem is popular (1M+ people have it), growing 20% per year, urgent, expensive, mandatory, or frequent, and ideally should be one or more of these .
- Don’t start with a solution
- Insight – what is your unfair advantage? Why will your company be the fastest to grow? Types of advantages would ideally be:
- founders (your expertise in the given subject)
- market (a growing market – but this should not be your only advantage)
- product (faster, cheaper)
- acquisition (easy to grow without too much investment)
- will it monopolize the market ? (as the company grows it gets stronger and gets more difficult for competitors due to marketplace and network effects)
How To Plan an MVP – minimum viable product
Deliver to first set of users to see if you can give them any value.Understanding of the problem is very helpful when building an MVP.
“It’s a version of a new product that allows a team to collect the maximum amount of validated learning about the customers with least effort & resources”, ” It’s the first working version of the product with enough features to satisfy potential clients & analyze their feedback with minimum effort & resources”.
Goal of pre-launch start-up:
- Launch quickly
- Get initial customers
- Talk to customers to gain feedback
- Improve product
In the most cases”, which is built very fast, with limited functionality, appealed to a small set of users & based to iterate from.
- Fast (takes weeks not months to create)
- Limited functionality (it focuses on a small set)
You would need a heavy MVP in specific cases like a product that requires significant regulation, hardtech, biotech, moontech etc. In this case you can build a website simply explaining what you are doing so customers have something to research if it sparks their interest during conversation.
-Important to understand that launch isn’t that special – acquiring customers is more important . In general, learning from customers is easier with an MVP.
Hacks for building an MVP quickly
- Set a time limit – exclude the features you cannot create within that time frame
- Write it down (stops you from changing it too much)
- Cut your spec (omit less important things and try to get anything out into the world)
- Don’t fall in love with your MVP, be open to change when needed.
- Predicting the investment prospect of your idea by evaluating it according to different factors:
- Growth which is usually exhibited in evidence like a fast increase in users/customers number.
- A startup pitch needs to include the problem the startup aims to address, the solution: the trial you are running within the circumstances created by the problem, an insight as to why you are certain that your solution is the best available answer to this problem.
- How to formulate the three components of your idea pitch (Problem, Solution, Insight):
- Problems should have one or more of these characteristics: popular, growing, urgent, expensive, mandatory, frequent.
- Solutions: never build a product based on a solution, always start with a problem.
- Insight: the founders must possess an unfair advantage related to either themselves personally, the market they are targeting, the product they are developing, free and sustainable acquisition, considerable level of market control and limited competition.
YC CEO and Partner Michael Seibel shares his approach to building a Minimum Viable Product (MVP) and getting your first users as a pre-launch startup. The followings are the goals to achieve during a pre-launch stage for the startup: To launch quickly; basically to put an MVP out in the market , Attract initial customers ,Talk to customers and get their feedback and Improve the product (iterate)
- Characteristics of an MVP:
● Must be lean: meaning that it must be able build able in a short period of time.
● Must have very limited functionality: meaning that it does not have to include all the features planned for the product to provide.
● Appeal to a small set of users.
● The MVP must function as a base to iterate from and not reflect the final intended product
- Some industries would require heavier and more complex MVPs. Examples:
● Industries that are significantly regulated (eg: Insurance, banking)
● Hightech (eg; building rockets)
● Biotech (eg: inventing a drug for cancer)
- If the startup is within the above mentioned sectors that makes it difficult to have an MVP, the founders could still have a pre-launch stage/MVP in the form of a website that explains the idea of their product.
- The launch does not have to be prominent.
- Hacks to build an MVP quickly:
● Timebox the specification that needs to be built.
● Write the specifications of the idea you are working on.
● Eliminate the less important things off the specifications
About 249Startups Demo Day
Our 2020 Demo Day is the culmination of all the hard work for our latest startups. We’re proud of the great strides made to improve their product-market fit and increase their customer traction. 249Startups supported them by hundreds of rigorous training and coaching sessions on topics ranging from growth hacking to financial modelling, supplemented with weekly mentorship sessions.
Join our 2nd Demo Day
During This year Demo Day, the startups will present the results of their work and investors will be able to discuss further cooperation with them. This year we will go digital due to COVID19 . Accredited investors will be invited to engage directly with the founders, invitations will be emailed to vetted guests.If you are interested in invest in 2020 portfolio startups feel free to contact us at firstname.lastname@example.org . Demo Days are invited only events exclusive to Angel Investors network , partners & accredited investors .
This Article had been developed by 249Startups Team for purpose of learning and sharing knowledge as part of Investments & Funding .