Prototype vs. MVP: Myths and Realities
Lately, I have had many founders come and pitch for funding or seek advice on how to raise capital. Many seemed unclear on MVP vs. Prototypes and have been confusingly using them. A lot of them did not understand that it is an uphill battle trying to raise money on a prototype and more so in today's economic climate.
While both prototypes and MVP (Minimum Viable Product) represent early versions of the product, understanding the subtle yet significant differences between them is paramount for success. Let me try and demystify these based on my direct and first-hand experiences.
The Prototype: A Glimpse into the Future
Prototypes symbolize the art of the possible, it is like the clay model developed by a sculptor before starting to build the masterpiece. It is a low-fidelity, often non-working representation of the product’s core concept hashed out on tools like Figma with UX, design, workflows, etc. It is a conversation starter, a method to push the vision out from your head to the eyes of potential users and stakeholders.
We use prototypes for the rapid iteration of design ideas and experiment with different layouts, functionalities, user flows, etc. before investing significant resources into development. They serve as a tool for gathering insights from potential users on the usability, clarity, and overall appeal of your design.
Prototypes let you identify and address potential roadblocks early on, preventing costly mistakes in later development stages. They can reduce downstream development costs.
While they can validate the market needs and convey your vision to venture capitalists, one can rarely raise institutional-grade funding with a prototype.
Prototypes come in several flavors and types
The MVP: Learning from the Real Market
An MVP is a fully functional product, but with a critical exception – it only offers the most essential features required to solve the core user problem. Think of it as the first iteration of your product, ready to be released to a limited audience and gather real-world data.
An MVP is critical for startups, and more likely to attract customers and venture capitalists, they serve to:
Validate Product-Market Fit: The MVP lets you test your core value proposition with real users and see if there's a genuine demand for your product.
Gain Early Traction and Feedback: By getting your product into the hands of early adopters, you can collect valuable user feedback to refine and improve your product before significant development investments.
Start Building Your User Base: An MVP lets you start building a community of users who are invested in your product's success.
Attract Investors with Proven Traction: Investors are more likely to back a product with real-world user data and validation than a theoretical idea.
So, When Do You Use Each?
Whether to build a prototype or an MVP depends on the stage of your product development and the level of refinement your idea needs. Here are some criteria for consideration:
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Prototype
At an early stage, when the problem and design are both unclear. Prototypes help explore different design iterations and gather initial user feedback (pre-usage).
When the primary goal is to understand user needs, and pain points but not actual usage or investment- a prototype will be enough.
MVP
When a problem is validated and the design needs refinement. MVPs are ideal to test the core functionality and user experience of the product with a limited audience.
An MVP is the perfect launchpad to get your product into the market, start collecting real-world data, and get investor attention.
A Practical Approach
The best approach often involves a blend of prototypes and MVPs. Don't view them as isolated steps; instead, leverage them strategically throughout your product development journey. A practical approach entails:
Prototype Early and Often: Throughout your design phase, create low-fidelity prototypes to quickly assess different design concepts and user flows. This iterative process lets you refine your idea and ensure a user-centric foundation before investing heavily in development.
Validate Core Functionality with an MVP: Once you have a clear design direction, focus on building an MVP with the core functionalities that address the most critical user problem. This lets you validate the core concept and gather valuable user feedback before adding bells and whistles.
Continuously Prototype and Iterate: Don't stop prototyping after launching your MVP. Use user feedback to continuously iterate on your product. Create high-fidelity prototypes to test new features and functionalities before full-scale development.
Be careful using terminologies interchangeably, many times you can end up miscommunicating to potential investors.
The MVP is Not the Finish Line
While an MVP is a significant milestone, consider it the beginning of your product's journey, not the end. The true power of an MVP lies in its ability to provide valuable user data that informs future iterations. Here are some best practices to maximize the value of your MVP:
Set Clear Goals and Metrics: Before launching your MVP, define key performance indicators (KPIs) that reflect your product's success. This could be user engagement, conversion rates, or feature adoption.
Actively Collect User Feedback: Gather feedback through surveys, user interviews, and in-app analytics. Actively listen to user needs and pain points to identify areas for improvement.
Prioritize Based on User Data: Don't get bogged down by feature requests. Analyze user data to identify the most impactful improvements and focus on them.
Why Investors Favor MVPs
Startups are a high-risk and high-reward game, investors are constantly bombarded with all kinds of ideas. What separates a promising venture from a pipe dream? Market validation. MVPs provide concrete evidence that your product addresses a real need in the market and has the potential to gain traction. By showcasing user engagement and early feedback incorporated into the development process, MVPs demonstrate a data-driven approach that inspires investor confidence. You may be able to raise VC money on a prototype based on your prior exits, a proven track record of execution, or striking a chord with a passion project of a certain investor- but that is rare.
Trying to raise funding on a prototype to an investor signals your unwillingness to take risks as an entrepreneur- it is unfair to assume that VCs will take the downside risk and you get the upside risk and reward as a founder!
Fractional CIO for Mid-Market Financial & Regulated Professional Services Organizations ✦ Drive Growth, Optimize Operations, & Reduce Expenses ✦ Enhance Compliance & Data Security
8moValuable insights, Nitin Kumar. Setting the record straight for first-time founders in the startup ecosystem.
Chief Executive, Start-Up Incubation, Innovation, Investment, Business Coach & Consulting, Advisory, Engineering, Education & Social Entrepreneurship, Investment, Portfolio, Accelerator, TiE Mysuru
8moGood compile of details Nitin Kumar, it gives clarity to founders in that stage. Another devil is TRL (Technology readiness level) in some of the sectors always validate
Technology & Growth Advisor to Global Fashion industry in 50+ countries for 39 years | AI for Fashion & Apparel
8mo💡 Nitin Kumar
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8moVery helpful breakdown on this subject Nitin Kumar , thank you. I was aware of MVP but was a lot less aware of the prototype, in software terms. About a year ago I took part in a local enterprise workshop, where I used a business model canvas for the first time. It was here that I learned about the MVP.
Nitin Kumar Getting that distinction clear in each stakeholders mind is a major step forward and will significantly increase the founders' chances of success. Thanks for sharing this it is a daily conversation at www.ckl.io on how to nurture the idea through to reality. #startups #innovation #mvp #ckl