Investors want traction and a validated product-market fit. And if you don’t have enough personal … [+]
With the constant coverage in the news of startups getting tens of millions of dollars in funding rounds, first-time startup founders might get the wrong impression on how to realize their startup idea. Focusing all of your efforts on fundraising while you are in the idea stage of your startup is a big mistake, especially if you don’t have at least one successful exit behind your back. Startup investors are usually willing to risk their capital only once they see real traction.
Consequently, in reality, you’d have to get through the idea and validation startup phases without any outside investment. And if you don’t have enough personal savings, this means you’ll have to somehow make it without spending any money.
Your first order of business is to start building your minimum viable product in order to be able to test and validate your idea. While this can be expensive, in most cases it could also be done for as little as a subscription fee to a few services.
1. Validate Your Idea Without Building Anything
Build a landing page that describes your offering and run (limited) pre-sales.
Selling something without having anything to sell yet is a very uncomfortable thought, but it is becoming industry standard and is one of the safest ways to test if your idea has potential or not.
Building a landing page nowadays definitely doesn’t require any technical knowledge. There are plenty of low-cost no-code page builders, and getting basic design assets is quite inexpensive as well.
This way you can test your offering with your target market and see if you’re able to draw attention and most importantly – revenue. If not, you can use the same tools to cheaply and quickly iterate on your offering and repeat the test to see if it improves your results.
2. Use No-Code-Tools To Build Your MVP
In 2023, no-code tools are becoming increasingly advanced. This is a trend that is going to increase exponentially, especially with the introduction of AI that is able to code.
This means that you can build much more than a simple landing page with very little technical knowledge. There are plenty of no-code services out there that you can mix and match to stitch together the alpha version of your product.
If you manage to gain traction, then you can reinvest your profits to hire a technical person or you can use your traction to raise money from a seed investor, which becomes much more likely if the traction you are seeing indicates that you’ve found product-market fit.
3. Get Founding Team With All The Needed Skills To Build And Sell Your MVP
If it’s not possible to build your idea exclusively with no-code tools and you need more complicated custom technical solutions, then you must involve a technical co-founder in the team.
This is also true for other skills. While two or three co-founders are ideal, there is no limit to the number of people you can involve in your founding team.
If these people believe in the idea and are properly motivated by a share in the project, then you can get a lot of skills, experience, and manpower without having to invest money in salaries. A competent founding team can easily produce and sell a high-quality minimum-viable product while spending close to no money.
4. Use Pay-Per-Conversion Marketing
Finally, one of the biggest money sinks in the early startup stages is marketing. You can easily burn a lot of cash by promoting your MVP and get very low bang for your buck – especially if you haven’t found a good product-market fit yet.
That’s why early on you need to restrict your startup marketing strategies to the ones that don’t require an investment.
In other words, you need to focus on marketing activities that you can do on your own for free (i.e. content marketing), or you need to find partners who are willing to sell your product on a pay-per-conversion basis. Of course, this is much harder than paying people to advertise you, but it might be your only option.
Moreover, since your main goal is to test your idea and gain initial traction, even small-scale partners can do a great job to bring your offering to potential customers.
