There’s a tired approach for how software startups go after seed funding, and investors are both weary and wary of it. It goes like this:
This approach is why the gross majority of software startups fail and why many investors either limit their funding amounts or step back altogether from funding software projects. Building a V1 is expensive, and the risk of failure is great.
What if we could tell you how to mitigate that risk before you outlay considerable funds (and stretch your investors’ trust) with a v1? Below we’ll address flaws of the above process and then suggest a better approach.
What do you think of as the minimum amount of research you need to prepare to obtain seed funding from investors? Unfortunately, most startup founders are on opposite ends of the spectrum, either leaning too heavily on the flash of their idea with not enough research to back it or getting stuck in a research hole that drains funding and life from the project before even attracting funding. The perfect balance is difficult to achieve.
Funding a v1 is costly, and getting investors to put up enough funding to build the v1 is challenging. It’s much easier to get a smaller amount, but when you start going after larger funding, expect the process to be rigorous.
Once funding is obtained, most startup founders lead their team right into development. This means that teams are planning and building simultaneously. Learning “on the fly” or in response to a feature or series of features that has already been built leads to reworks. Too many reworks can bankrupt a software project. Investors do not appreciate when a startup founder has to come back for more money before the project is even launched.
Getting funding on the premise of building a v1 app doesn’t leave much time for the kind of up front idea validation, market research, understanding the competitive landscape, end user research, testing, and clarity development required to build a minimum lovable product (MLP). If you’re shooting for anything less than a minimum lovable product for the end users, you’re likely to end up in the failed category.
We aren’t here to rewrite the process – we’re actually suggesting you throw it out. Startup founders are getting ahead of themselves when they go after funding for the v1 before they’ve achieved product clarity. Instead, they should go after a small influx of seed funding
This is more effective, because:
Instead of seeking far larger investments for building a v1, consider going after just enough funding to pay for an Innovation Lab with ENO8’s experienced team. With the clarity we’ll help you achieve in the Innovation Lab, you will be
After working with numerous successful startups that have gone on to raise millions of dollars, the ENO8 team has the process of gaining clarity down pat. For an example of some of the many questions we’ll guide you to answer in the Innovation Lab, look at the list of questions in this blog, Your Startup Won’t Fail from Technical Issues. This is just some of the full illumination of clarity you’ll take from the Innovation Lab. Learn more about the Innovation lab here.
Contact us to learn if the Innovation Lab is right for you (it is) and how it will prepare you to go after (and appropriately allocate) the big bucks.