Minimum Viable Product · Outsourcing

Is it possible to make business without Investor?

Siarhei Harbachou Specialty Market Researching

December 29th, 2015

I just thinking, why do people invest so much money in startup, where do they spend money?
Development, advertising, or other stuff?

Does anybody have positive example of creating MVP without serious investments?

Tom Jay

December 29th, 2015

I pretty much only work on MVP products with people, I work mainly for stock when I do.

The most important part of an MVP is getting something into a users hands, its not the final product, it may take dozens of iterations to be the "final" product, look at the iterations of Facebook and Twitter. Don't get hooked on how something looks, its just the begging, it will change.

I have three rules for MVP success of mobile apps.

1,000 active users - This should be friends and family to prove the product with user studies and feedback. This proves the basic product is viable.

10,000 active users - This shows that people like the product and will use it, it shows that the some people will share the app and you have a little traction,

100,000 active users - This shows that people like the app, use it and will share it, you should have basic analytics to show that you have an idea of what your users are doing, it shows that your back end system is scale-able to some extent and that its not a bottleneck.

The cost of each user acquisition might be about $4 each so at 100,000 active users you should be looking for help with marketing the app and should have a good plan for monetization, the app is worth up to $400,000 so now is the time you can talk with investors for funds to grow, I would never ask an investor for money to build an MVP or to help get started, bootstrap it yourself until you get some solid numbers, this could take a few months or years but then you know exactly what your market it doing and should have a good idea of what is needed next.

If you can not get to these numbers yourself with your MVP then there is something wrong, if you need money to get to this point then I think there is something wrong.

I have never work with an investor who was willing to pay founders a huge salary to make an MVP unless maybe they had a good history with successful exists.

If this is your first MVP then you need to show success and proof of the hard work.

Its not all about money and profit, its about proofing you are committed and are stable.

Work at a full time job until you get some good numbers, keep as much as the company as you can. No one says you have to have an investor, I would say most of the apps on the apps store were developed without any investment, I suspect they fail from bad business plans and lack of marketing not as much from bad technology or the founders.

Make sure you own all the IP, if you need a back end server for something don't think you can use Parse or some third party service and call it your own, you will have to own everything end to end.

Don't think you can use an HTML5 solution that works for iOS and Android, these rarely work for what you want, people want and expect a native solution, a web site may work for some users but if you want the availability of an install app then make it a native app from the start.

So to answer your question, YES it is possible and YES people do it all the time.

Normally you need investment for growth but if you can get the app to go viral then you do not need funding for marketing, if you get 10 people who tell 10 people who tell 10 people then your off and running. I've seen Twitter posts from celebs that create hundreds of thousands of downloads so nothing says you can not bootstrap the company yourself.

Its normal to have teams with a few different skills, Business/Marketing, Technical and Design/Graphics, nothing says this can not be the same person but in general is not. Having more then one person involved helps to build a better product I think and helps to keep the momentum going over the product life.

Nothing says you can not have external companies do most of this work but I think that partners will contribute more to a long term successful company.

Michael Meinberg Teacher (iOS Development) at The Mobile Makers Academy (A Hack Reactor School)

December 29th, 2015

Sure, I have done it.  But I am a software developer, so I built the product myself and then partnered with a sales person who did cold calls.   But you will have to spend money eventually, you need to build the product,  or pay someone to do it, and then to do it right you need money for marketing, sales etc.

The bottom line is unless you have the talents to build the MVP yourself and someone is willing to sell on equity, you will have to spend money to make money.

Simon Effing Technical Advisor and Scala Developer. I build sustainable MVPs for lean B2B startups.

December 29th, 2015

I can confirm what Michael said. I've built several MVPs (web-applications) without any external investor involved. One of them is beyond MVP status, doing business and already pivoted several times without technical problems. 
The expensive part is not the MVP. It's the growth hacking: building your tribe and getting traction. 

Gray Holland founder / director at UX-FLO

December 29th, 2015

Hahaha -- well, the key to making a MVP is you can make a MVP, which means you are a developer. This is why many startups start with a couple of developers in a garage. Currently without such talent in your team, you are hard pressed to be able to put something meaningful in front of potential customers to test and get feedback... 

Armand Sepulveda Co-Founder & CEO at Dycap Media Solutions, Inc

January 7th, 2016

Absolutely agree with the comments above. I think nowadays we just hear the huge valuations and investments of millions (sometimes billions of dollars), but I would argue that most successful businesses have not raise investor capital.

I think we often forget that VCs and active angels need to invest their money in start-ups but not all small businesses/start-ups need investment money. Unless the industry is Life Science related or clean energy where you need millions of dollars to deal with regulations and buying equipment, most company's should be able to make money without investors.

A professor of mine said it best, the best case scenario is to fund your business with other people's money, those people are called customers.

Scott McGregor Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.

December 29th, 2015

Sure, bootstrapped start ups do MVPs all the time. Facebook was effectively an MVP bootstrapped with Family money at Harvard. It did not raise VC money until after its MVP was at all the Ivy League Schools plus Stanford. At some point if you are growing fast, your growth will be limited by limited capital. When that happens you either grow slower or take investment. Some companies hit that limit quickly, others not for years... Scott McGregor,, (408) 505-4123 Sent from my iPhone

Arun nedunchezian

December 29th, 2015

Agree with all the answers... Basically if you are spending money to create MVP then you are doomed to fail... period... I have seen this with at least 5 startups.. 

There are many technology companies going after startups these days getting money for developing MVP. They develop namesake mediocre product to get the money. Most of the time only 50% of the feature set is completed. The company demands more money to finish rest of the product. Founders then go after angels and VC's to get money instead of trying to find customers... 

This is a win-win situation for the technology company and lose-lose situation for the company founder(s), because if the founder gets money from investors then technology company gets more money or startups folds and technology company move on to another pocketing the accrued money for nothing... 

The right way is for the founders pour their money and time to build a product. if they need external skill set then they include someone for equity to build a product then immediately validate with the users and show some traction.. The you go to investors get money and build the product once again in the right/scalable way. Twitter, facebook, youtube have done it this way... 

Siarhei Harbachou Specialty Market Researching

December 30th, 2015

Thank you for your answers. Very helpful!

Rob G

December 30th, 2015

yep, happens all the time. these days you will not get significant investors without traction first. focus all your early efforts on traction. it's gorilla warfare - figure out a way to make headway with limited resources. Traction and proof that you are resourceful and tenacious is what will attract investors at terms you can live with. 

Charles Kraus Senior Product Marketing Manager at Limelight Networks

December 31st, 2015

I 100% agree with everything said so far. I can reinforce these strategies with my experience doing exactly what has been suggested, and watching traction build nicely - with no investment so far. This could change shortly as some milestones are hit.