How to go From Minimum Viable Product to Fully Funded

The early days of building can feel like you’re making decisions in the dark. Runway is short, the stakes feel high, and it’s not always obvious what to do next. In this conversation, Every Founder and CEO Rajeev Behera and Founder Social Club break down their approach for building an MVP framework and securing that early seed funding. Here are some founder insights from the conversation to help you make informed decisions as you grow.

Determine your ideal customer profile

First things first, you need to determine your ICP. Think granularly: What kind of company will be your customer? What industry? How many employees? When you've drilled down on that information, then decide who at that company you'll be selling to. Once you know that, you can start doing outreach to individuals in those roles and find out what their needs are.

If you're in a place where you're building a product with existing competitors, you may need to adjust your approach slightly. It's a fact of scale that in fields with already established category leaders, your startup probably can't compete with everything those other companies already do. So when you're determining your ICP in a competitive market, Rajeev recommends scoping down. Look at a smaller subset of customers and think about what features they need, then build that. “I’ll first start with just 5-person tech companies, then what features do I need?” Rajeev describes his process and the questions a founder needs to answer. “Oh, that list is a lot smaller! I build that list, I start with that, and that’s actually doable.”  

Do you need all the features that your already established competitors have to succeed? The answer lies in innovation. If you have a product that is innovating in major ways, maybe you only need to be at 50% parity with your competitor's features. If you have less innovation, you need to be at higher parity to compete. Put yourself in your customer's shoes: imagine you're buying a product, choosing between two finalists—your company and its existing competitor—who do you choose? Answering this honestly will help you see where you need to be to compete.

Lastly, you don't stop with that scoped down ICP. Once you have that initial MVP established, you expand and grow accordingly. For example, when you've got satisfied customers at companies with 5-25 employees, then you can increase your feature parity and innovation and expand that ICP. It's all about smart growth.

Selling without selling

Most founders don’t start out loving outreach, especially when rejection feels personal. You’re not alone in that, but if you want to make a startup that can succeed, you need to be reaching out to your ideal customer before you've even started building your product—and most likely before you've hired a VP of Sales—to make sure you're building the product that your customer needs. You don't even need to have the idea of the product yet, just an idea of your ICP. Many founders hesitate to reach out because rejection stings and that’s completely normal. But the earlier you get real input, the faster you build something people actually want. Rajeev finds that founders who are scared of outreach don't want the rejections, they want to live the dream without the feedback, but that's not how you build a successful product. He recommends setting time in your week—every week—to do cold outreach.

Again, though, not every founder is the best sales person, and many founders naturally hate rejection. If that's you, it's best not to think of it as selling, but as research. You're researching the best company to build—and that's a very necessary step—because without that research you may find yourself building a product nobody wants. To start, Rajeev would recommend sending a minimum of twenty LinkedIn messages a week. LinkedIn is better than e-mail because it comes with built in verification—with one click they can see your background, accomplishments, and connections.

When Rajeev started outreach, he got very little response, but one adjustment changed that. Instead of talking about his company, he began asking them about theirs. Those messages led to meetings, and those meetings led to better understanding the ICP and how to build a product for them. So when you're doing cold outreach, find something about their company that interests you, something that you respect, and start the conversation with that. Don't try and sell, instead ask for advice.

"You don't want to build a product that nobody wants," stresses Rajeev. "You want to sell it first, and then build it."

Design partners as initial customers

Now you've figured out your ICP, you've done the research of that ICP through outreach, and hopefully through that outreach you've found a few potential customers who are interested in your idea and upcoming product. If you've done your outreach correctly, you won't even need to ask them to help, they'll be volunteering. The key here is not to show them your in-progress MVP. That sounds like a good idea on its face, but in practice will lead to them brainstorming cool nice-to-have features as opposed to the breakthrough features that will make your product invaluable.

Instead, ask them to show you their day-to-day job without your product. "You have to sit in the room and watch them do the thing," explains Rajeev, "Then you know exactly what the thing is." With an up-close look at their workflow, you'll see what their process is lacking—how you can make that process smoother—and that will be integral in helping you scope your MVP. If you don't deeply understand the underlying problem, it becomes nearly impossible to build a product people truly need.To put it more bluntly, "Without the knowledge of what the underlying business problem is, you have no business building a product."

Fundraise when you have your story

It's easy to delay fundraising, it's easy to think you need more traction, but the real answer for the question of when are you ready to fundraise? It's when you have your story. The reality is that investors are looking for big exits, and your early revenue doesn't give them enough information. A common sentiment among first-time founders is that they need traction to start fundraising, but in a lot of cases, having traction can actually make you look worse, because no one has the initial traction of a billion dollar company, even if it will eventually get there. That's why your story is so important.

The story is what investors are looking for. But what is that story? It's equal parts founder, founder market fit, and product. You're not selling your company, since your company barely exists, you're selling yourself. Even if you hate bragging, you need to brag to possible investors. They need to know why you're the founder who's going to deliver. Part of that is your background, and part of that is your story. When trying to find the spark of your story, ask yourself "Why did I start this company?" Describe the problem you had or witnessed that led to this moment. Make it inspiring and make it personal to you.

Then talk about your founder market fit. A lot of investors don't need this, they're just looking for the founder story, but some investors will want to know why you're the right founder for this company. Explain that in your story. Then, lastly, talk about your product.

Finally, try and think from the investors perspective. At the seed stage so much of the decision to invest is based on vibes. The first step to succeed there is with your founder story, the second step is to avoid anything that could sour those vibes. What's the number one vibe killer for an investor? A founder looking desperate. To avoid this, email an investor once and then don't email again until you get a reply. This can take a lot of restraint, especially from first-time founders, but the company an investor wants to fund is a hot company, and showing that desperation will instantly disqualify you. The only exception to emailing a second time is to send a termsheet from another investor. That's the opposite of desperation, that shows how in demand your startup is, and when you have no revenue numbers at that initial seed stage, that investor demand can be the main way to show success.

Raise as much as you can

Often founders will drastically underestimate how much they need to raise. When it's just a couple of founders working long hours, it can feel like your runway will last forever, but when you're scaling towards your Series A, it can cost a lot more. Rajeev's final tip for founders in the early stages is to not be picky about raising money and to not worry too much about dilution. "Take all the VC money you can, because the only thing that will make your company go out of business is if you run out of money."

For a deeper look at this discussion, you can watch the full recorded webinar here.