What Matters For Startups?

 

  • What does it take to build a successful product?
  • How much time do entrepreneurs spend to get to market fit?
  • How much investment on average do entrepreneurs spend on MVPs?
  • How many iterations of the products founders do before they get to market fit?
These are all the frequently asked questions that come to mind when you plan to build your product.
In the last 2 months, I spoke with 25 founders who have built successful companies to find if there are averages that we can hold on to. The main goal of the exercise was to find patterns among the different startup stories.

About the data

The yardstick to consider a company successful is tricky since companies can be considered successful or unsuccessful on different parameters. Profitability, number of users, usage etc may not hold true for all companies and would depend on their business model, domain and stage of their business. Hence, we picked getting funded as the parameter to validate success as it is one parameter consistent to prove that the startup did make successful leaps.
As successful startups can come in all shapes and sizes, hence to limit our study’s scope, we built a sample of companies that have achieved funding between 500K USD and 2M USD. This way we were able to capture companies that are not too small to not have validated their company or too large where growth and success would have been driven by many external factors and teams. We have tried to capture thoughts from companies where founders and their actions were directly responsible for results.
The way for the survey was mostly through Zoom calls. Few people just filled in the survey online while for most people, the survey questions were asked over a call. During the course of these conversations, I was also able to get piece of wisdom from many of the founders that I have sprinkled throughout the survey.
Now that you have got a background into our process and respondents, let’s dive into what we learnt.

1. Average investment in MVP is close to 100K USD

Out of the 22 founders who agreed to reveal initial investment, the group was pretty much split in 2 equal halves around 100K. The average amount going in MVP comes to 100K.

2. Number of iterations that founders took to get to market fit is 3

Many founders actually reported to have been on a continuous iteration since launch, on deeper discussions, major iterations for a product journey are found to be 3.Number of iterations that founders took to get to market fit is

Doug Herr

Senior Director, EHR Services at Nuance Communications

Technology has created possibilities that were not available before, especially the ease and accessibility. Hence entrepreneurs have to grab them with both hands.

Having a product in healthcare, I can tell, it is very hard to change behavior in Healthcare industry.

3. Average time to market for founders from start of development to launching for the first time is around 9-10 months

Many times founders are in a hurry to launch and may even be planning for a 4 week or lesser launch time. This is to share that most successful startups had a 9-10 months development period before launching.

Jarie Bolander

Founder and COO at Lab Sensor Solutions

The ultimate signal of success is when someone buys. If people are not buying, then its not working
While it is always sunny in startupland, there is a big survivor bias. A lot of it is hard work and luck. Success is the big exit is not true

4. Average time spent in planning the idea before development started is around 6 months for founders

While many founders even reported to start working on the idea within a month of their epiphany moment, most reported around a 6 months period before they really jumped in. Few founders also waited for more than a year before getting started. The latter category primarily consisted for innovators with high complexity startups.

Keith Somers

COO and Director of Sales at HealthCorum

Being a healthcare entrepreneur, I want to share that Cyber security is very important aspect of a healthcare platform in sales of healthcare especially during the sales cycle, all these questions would come. Cold techniques do not work with healthcare.

5. Average time to see traction from the day of launch is between 1 month and 3 months

This is pretty much in line with average for iterations i.e 3. We can safely assume that around 2-3 iterations must have taken place in the 3 month time.

Berk Tas

CEO at SentiAR

Seeking advice, network and having constant communications with outsiders, forming a board asap, having an advisory board is super important. You have to understand your customers really well.
While people say startups are risky, Risk of a startup is based on perception of individual and what you value.

6. Average amount spent in marketing is around 20K during MVP stage

Many startups even reported zero marketing spent on any of the paid mediums apart from just the founder’s or marketing team’s time.

Ravi Amble

Founder, President & CEO at Suquino

Everything thats you do in a startup is around people- building for people, hiring people, raising from people. There is no blueprint or roadmap because you are building something is new. You have to make your own trail.

7. 85% of founders had an experience building another prior startup.

15% said this was their first startup.

Benjamin

Need to find technology partner who also has subject expertise. Do not put enormous amount of focus on one thing because things do change.

8. 62% of startups outsourced development during MVP stage with 38% did not

These are really good numbers for support of global teams given that this data consists of companies that are successful. It establishes that outsourcing worked for successful startups.

Since during the survey, I was able to get into very interesting conversations with founders, I was also able to extract some interesting information that was not part of the official survey.

Lisa Alderson

CEO and Founder at Genome Medical

Driving adoption is challenging yet important

Marketing avenues as reported by startups were

01

Conventional marketing channels

  • SEO
  • Outbound
  • Paid Ads
  • Direct Sales
  • Emails
02

Non Conventional marketing channels

  • Featured in Reports
  • Trade Shows
  • Webinars
  • Journals and Peer Reviews
  • Publications
  • Partnerships
  • Conferences

Reasons for getting funding

Invoicing

Getting past the market fit

Customer Management

Needed for due diligence

Commission Charging

Bringing device to market

Dashboard

For product development

Tax Management

To acquire customers

User Management

For strategic partnership

Stock Management

Establish MVP

Analytics

Market need and interest

Founders that participated in the study

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