Here’s What Investors Want To See In Your Startup’s Product
The world was not ready for the iPhone in 1993 when Apple launched it’s ill-fated Newton.
I have a huge amount of empathy for the founder who is too early, too narrow, or too buggy. One of my startup war stories is about the company three of us founded that was YouTube a couple years before YouTube. We had the tech and a product and revenue, but we couldn’t get the funding. It was our own fault, because we were too green to position and pitch it properly.
Don’t let that happen to you. Here are the five questions about your product investors will need answered before they’ll invest.
Question 1: Does the thing work?
The Newton, while innovative as hell, was hampered by buggy software at its most critical point, the handwriting feature. The Newton should remind every entrepreneur that not even Apple can escape the gravity of a product that doesn’t do its primary function to perfection.
Investors don’t invest in your idea, they invest in the execution of your idea. This creates the entrepreneurial paradox of needing funding to get the prototype built to get the funding. The solution, of course, is the minimum viable product, the MVP, but this is where a lot of capital-seeking entrepreneurs get it wrong.
The minimum part of MVP doesn’t mean minimally functional. An MVP has to be slim, it only has to do a few things, but it has to do them to perfection. You can go with no code to build an MVP, but the coding still has to be tight. You don’t need to know syntax, but you need to know process, flow, and error handling, and all those things have to work every time.
Finally, you can only get away with so much fake-it-til-you-build-it magic. The parts of the product that need to be automated for the product to scale can be manual. The parts that need to be automated for the product to work need to be automated.
Question 2: Can you sell the thing?
If Teslas were only still available at $100,000 and up, Tesla would not be around today. That almost happened, for that very reason.