What is Pre Seed Funding and How Do you Raise It?

Fundraising1 min read
What Is Pre-seed Funding? How to Raise a Pre-seed Round

The process of developing a new product begins with an innovative idea and progresses to a launch, but there’s more than one right way to approach all the steps in between. Regardless of what your process looks like, it’s important to stick to a structured development plan if you want your product to succeed. We can break down the typical structure of the new product development process into five main steps:

  1. Ideation
  2. Market Validation
  3. Prototyping
  4. Beta Testing
  5. Commercialization and Launch

No two product development cycles are exactly alike, and the precise series of steps you’ll take to create your product depends largely on what kind of startup you have. Nevertheless, these five steps form the core of nearly any effective product development process. Let’s take a more detailed look at what each of these steps entail:

1. Coming Up With an Idea

Every product starts as an idea. You may already have your product idea, but if you don’t, brainstorming (preferably with a team) is a great way to kickstart the idea-generation process. The brainstorming stage should be a time when everyone feels comfortable contributing their thoughts without any fear of judgment.

The best way to come up with new product ideas is to think of existing problems that need solving — sometimes, the best products are those that meet needs people didn’t even realize they had until they heard about the solution. As the (likely apocryphal) Henry Ford quote goes: “if I had asked people what they wanted, they would have said faster horses.” While the quote’s history is up for debate, there’s little doubt its sentiment holds true.   

The ideation stage usually begins very broadly while you’re still trying to match a problem and a solution. Before too long, however, you should begin to narrow your idea into something you can describe in more concrete terms. You’ll know you’ve fully solidified your idea and are ready to move on to market validation when you can clearly and concisely explain your product’s main purpose (what problem does it target?) and how it provides value to users (how does it solve the target problem?).

2. Validating Your Idea in the Market

Essentially, validating your idea in the market means finding out if anyone is actually interested in buying the product you want to sell. The first step to answering that all-important question is determining a need. You’ve likely already completed this part in the previous idea formation step. In order to come up with your product idea, you’ve recognized a need experienced by a significant group of people and you’ve dreamed up a new product that will meet that need.

Next, you need to determine who your target audience is. Again, you likely already have some idea of what problem your product solves and for whom. However, now is the time to test your theories and find out for real whether or not your perceived target audience is interested in your solution. 

You can use focus groups, surveys, and market research (for example, researching who your competitors’ best customers are) to discover which group(s) of people have the greatest interest in your product. You might find out that your actual target audience looks a bit different than you thought — that’s okay. It’s important to adapt your business plan to your market validation findings rather than try to force your product to fit into the market you initially thought it would. 

Finally, you should conduct a market analysis to determine how your product will fit within the competitive landscape. Market analysis seeks to answer questions like “how large is my target market?” and “who are my closest competitors, and what are their strengths and weaknesses?”

3. Designing a Prototype

Designing and building a prototype is one of the most exciting startup product development steps because it’s the first time you get to actually see the product idea start to turn into reality. Your prototype is not yet a fully-functional product, but it's a mock-up of the final design that gives you something concrete with which to perform tests or gather feedback. 

You can create your prototype yourself or outsource the task of prototyping to a third party. New startups sometimes choose to outsource the work of actually building the prototype because they may lack the required in-house expertise while the company is still very young.

It’s important to build a prototype for multiple reasons. First and foremost, prototyping helps you determine whether or not the product you’ve designed is possible to create at all. This is the stage of product development processes when you’ll be confronted with critical questions like the product’s technological feasibility and what types of materials or resources it will require.

Just as importantly, having a prototype ready is a distinct advantage when it comes to securing investments or running focus groups. The ability to actually see or hold the product is a great way to sway potential investors, and your target audience will be able to give more helpful feedback if they have an understanding of the product that’s based in reality, not just theory.

Usually, the prototyping step begins with a sketch, a blueprint, or even just a list of specific, essential features. As you iterate on these ideas, your product can begin to take shape. By the end of the product roadmap and the final iteration, you should have not just a prototype anymore, but an MVP (minimum viable product). Your MVP is the earliest version of your product that actually functions.

4. Beta Testing

You’ve done a lot of work thus far to validate your product idea and build a prototype — now it’s finally time to test it out. Beta testing typically overlaps prototyping, since you’ll be tweaking your prototype as you go according to the results of your tests. 

Testing is not a one-time step, but an ongoing process that should be repeated each time you change or add to your product. Most startups start beta testing late in the prototyping stage and continue testing as the product moves through the MVP stage. Each round of beta testing should answer two main questions:

  1. Does the product function as intended?
  2. Does the product solve the problem it’s supposed to solve?

Some testing can be carried out directly by you and your product development team. For example, your very first tests will probably be simple functionality tests to find out if the product world at all. However, once you have a functioning product, answering the second question will require you to enlist the help of user feedback. The best way to test whether or not your product adequately solves your target customers’ problems is to put a working version of it in their hands (either literally or figuratively) and solicit their honest feedback.

5. Launching Your Finished Product

After numerous rounds of beta testing, your product will eventually be ready to move out of the MVP phase and into the commercialization phase. At this point, you’ve received a ton of feedback on your product from real potential users and leveraged that feedback to hone your MVP into a finished product. You now have a fully-realized product that functions well and solves the problem it’s intended to solve in the minds of your customers.

It might feel like you’ve finally reached the end of the road now that your product is ready to launch, but in truth your work is just beginning. Introducing your product to the market for the first time is a huge step for your business. Even after you start selling your product, you’ll need to carefully gauge the reactions of your customer base and keep updating the final product to make sure it continues to deliver maximum value.

Before you can start gauging the reaction of your customer base, you’ll also need to invest time, energy, and resources into marketing your product. Branding your product and marketing it to your target audience is a crucial process in itself, of which planning your product launch is one of the first and most important steps. 

The promotional content you create for your product launch will be many of your future customers’ first impressions of your product, so it’s important to make sure it has a strong impact. You can start generating buzz about your product with tactics like paid advertising, SEO blogging, and free demos.

How to Find a Product Development Mentor

The product development process is not an easy road. There will undoubtedly be setbacks and moments of frustration along the way, and it’s important not to let yourself become too demoralized. A mentor can support you throughout the process and help to keep you motivated.

One of the most challenging parts of accessing quality mentorship is simply locating a mentor who is a good fit for your needs. It’s important to find a mentor with relevant startup experience who can use their successes and failures developing their own products to help you develop yours. 

Mentorcam makes it easy to connect with your choice of mentor by scheduling virtual meetings whenever and wherever it’s convenient. Check out our list of product development mentors and start receiving personalized advice in hardly any time at all.

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Chris Yeh

Chris Yeh

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Chris Yeh is a writer, investor, and entrepreneur who has been in the world of startups and scale-ups since 1995. Co-author of the bestselling book Blitzscaling together ...

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Jacob Jaber

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Jacob Jaber is the Co-Founder & Chairman of Philz Coffee. As CEO for nearly two decades, Jacob grew Philz from the original coffee shop in San Francisco's Mission Distric...

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Edvard Engesaeth

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Dr. Edvard "Eddie" Engeseath, MD is the Co-founder of telehealth startup Nurx, angel investor, startup advisor, and a former family physician. He founded Nurx to make pre...

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