MVP in 2023: Hedging Against Market Downturns with a Strong Prototype
Here’s a sobering statistic about our current economic climate: 48% of U.S. investors expect a recession in 2023, and 21% expect it in 2024. That’s nearly 70% of investors expecting the worst. But for a tech startup, this is good news. Economic downturns are the perfect opportunities to design solid products and begin MVP fundraising. Investors will judge your business based on your MVP. If your product meets investor criteria, you’re on your way to success. Let’s define an MVP and why it’s a worthwhile venture during a recession.
What Is An MVP?
MVP is a minimum viable product or a bare-bones version of your product or solution that includes only the essential features needed to solve the core problem or meet the main goal. It includes just enough features to make it usable for your target market while allowing for further development and improvement based on user feedback. An MVP lets you observe how customers interact with your product and determine whether it fits their needs and budgets well.
4 Reasons Why MVPs Thrive During Economic Downturns
It seems counterintuitive to create and launch new products instead of tightening your startup budget, but the opposite is true. Here are the best reasons why you should invest in an MVP during economic downturns instead of delaying it due to fears.
1. An MVP Favors Tight Resources
Even in good market conditions, an MVP aims to deliver a functioning product with minimal waste of time, money, and human resources. An MVP is your core product without the bells and whistles, built as fast as possible and based on actual and specific use cases. This is what investors want to see: a clear, revenue-generating product worth their money.
A frugal approach also means maintaining revenue without borrowing or surrendering equity to support your MVP project.
2. An MVP Meets Customer Needs During A Recession
As the economy changes, so does consumer behavior. Recent events, economic forecasting, and numerous other variables present challenges for your end users that an MVP can address. If anything, a recession reveals new problems for a tech startup to solve, making your customers more receptive to your product.
Understand what your customers need right now as they adapt to the recession and what they’ll need in one, five, or even ten years. An MVP funding strategy can help you meet these needs ahead of your competitors.
3. An MVP Demonstrates Feasibility During A Recession
Proof of concept (POC) is a critical step in MVP development, where a tech startup proves its feasibility of a concept or idea can work in the real world. Given that a recession fundamentally changes investor and consumer behavior, an MVP that makes business and practical sense is guaranteed to succeed.
If your product is viable during financial uncertainties, investors will be more open to supporting your venture. This means your testing phase may move faster and yield better results than during prosperous economic conditions.
4. Outsourcing an MVP Project Is More Cost-Effective During A Recession
A tech startup can get more value for its MVP development budget during economic downturns in several ways.
- You can reduce overhead costs by keeping your in-house team lean while leveraging experts to guide your MVP project
- You can negotiate with your development partner about the size of their outsourced team. Reduce their headcount as your project moves forward
- You can maintain your in-house team as outsourcing reduces burnout and errors. This approach retains critical knowledge and avoids turnover costs
Ultimately, a strategic partnership with a third-party vendor can help you navigate the recession rollercoaster without hurting your bottom line.
What Makes A Strong Prototype During A Market Downturn?
Now that we’ve established that an MVP makes good business sense during a recession, the next step is to know how to design the best MVP for your tech startup. Every successful MVP has the following qualities:
1. A Narrow Audience
Identify your buyer persona or ideal customer and their specific needs, particularly during a recession. Casting a wide net means you’ll need more effort to capture and convert your leads who are already looking for ways to save money. But when you design an MVP for a clearly-defined niche, you’ll get more value for your advertising budget when you go to market.
A successful MVP gathers data from all possible sources, including secondary and tertiary customers. Remember that an economic downturn produces ripple effects that are often unexpected. For example, a recession can lead to greater demand for childcare products as families avoid paying for babysitting or housekeeping.
A tech startup can develop solutions that help families manage time, reduce stress, and multitask. In this case, the MVP considers feedback from parents, teachers, childcare providers, and community groups to understand their core customer needs.
3. Market Validation
A tech startup rarely operates without competition, so your MVP will likely need an edge in the marketplace. This means focusing on the right feature offerings that prove your product’s feasibility. An economic downturn is an ideal time for faster market validation because resources become scarce, but innovative solutions are necessary.
4. Thorough Testing
A recession means you want to put the least possible time and effort into the development process, shifting your focus to testing. The more you test your MVP, the better your decisions and the fewer mistakes you make. Use cost-effective MVP testing methods like customer interviews, social media surveys, and landing pages. Work your way up to building a single-feature MVP, launching a crowdfunding campaign, and seeking pre-orders.
5. Successful Soft Launch
A successful MVP conducts a soft launch to present the product to early adopters. A soft launch sells the first iteration of your idea rather than the finished product to help you understand your customers’ willingness to pay. It also allows you to make mistakes with as few people as possible, using that feedback to improve your MVP. This way, you offer genuine value for your customers without exposing them to unnecessary risks.
Accelerate Your MVP Fundraising Project with Sphere Partners
If the looming recession has revealed an opportunity for a game-changing solution, Sphere Partners is ready to get you to market as fast as possible. Our MVP software development and acceleration expertise will guide your tech startup through ideation, prioritization, coding, validation, and iteration. Make Sphere your MVP partner and bring your concept to life. Contact us today to learn how we can help develop your MVP or support your funding endeavors, and get it to market fast.