Build first, fund later: Why an MVP still matters

MVPs have been getting bad press lately. Not so long ago, launching an MVP was the gold standard; many of the world’s most successful tech giants – Facebook, Airbnb, and Dropbox – owe their success to this approach. Yet, as the startup ecosystem matures and the race for investment intensifies, today’s critics are prematurely declaring the MVP obsolete. Founders, lured by investment rounds, are prioritising pitch decks over product validation and chasing capital before proving market demand.

But dismissing the MVP in favour of funding first is a mistake. A well-executed MVP remains one of the smartest strategies for startups. The problem is not the concept itself but how often it is misused and misunderstood. If anything, now is the time for startups to embrace an MVP mindset to survive and thrive.

What is an MVP and why does it matter?

So, what is an MVP? The term “Minimal Viable Product” was first coined by Frank Robinson and popularised by Eric Ries in The Lean Startup. It refers to the simplest version of a product that allows a startup to validate its key assumptions with real users.

The goal? To maximise learning with minimal cost and effort.

Most tech startups fail. According to CB Insights, 42% of failed startups cite “tackling problems that are interesting to solve rather than those that serve a market need” as the primary reason for their downfall. Why? Because they rush into development or funding without testing demand.

Remember, an effective MVP is not just a rough prototype – it needs to solve a clear, specific problem. It must offer a real, usable solution and generate early user feedback for improvements.

Standout Jobs is a good example of a company that underinvested time and resources into an MVP. The recruitment platform raised US$1.8 million in funding but ultimately collapsed because it built an over-engineered product before validating user demand. Electroloom, which promised 3D-printed fabric, never scaled because of “slow technical progress, significant scientific risk, a lack of an MVP, and a poorly defined market opportunity”. Then there’s Juicero, a startup that raised US$120 million but saw its flagship product – a US$400 juice press – rendered useless when consumers realised they could squeeze the juice packets by hand.

A weak or nonexistent MVP can lead to wasted investment, misguided product development, and swift downfall when reality doesn’t match expectations.

Why an MVP-first approach works

An MVP-first approach ensures that a startup is solving a real problem before seeking investment. By focusing on building, testing and iterating, startups can develop a product that truly resonates with users, making them far more attractive to investors in the long run. This is a far more effective strategy for several reasons:

1. It validates market demand

An MVP provides real-world data on what customers need rather than what founders believe they want.

2. It reduces risk

Developing a full-scale product before confirming product-market fit is a fast-track lane to failure. An MVP allows startups to avoid excessive spending on a potentially unviable idea.

3. It encourages adaptability

An MVP provides feedback, allowing startups to refine their product based on user behaviour rather than assumptions.

4. It keeps startups focused

Many startups fail because they try to do too much at once. An MVP forces founders to concentrate on solving one key problem effectively before scaling.

Of course, some industries, like deep tech, require significant R&D investment before an MVP can be built. But even in these cases, investors will still want to see technical proof of concept, as well as a highly qualified team capable of executing the vision.

The pitfalls of raising funds too soon

Securing investment before proving a product’s viability often leads to misguided development, premature scaling and a lack of market traction. It can also mean that founders find themselves locked into a vision that doesn’t match reality, making it difficult to pivot when user feedback suggests something different.

Color, a social photo-sharing app that raised US$41 million in venture capital before launch, is a good example of this lack of market traction. Despite the hype, the app failed to attract users because it misjudged how people wanted to engage with social photography. Without an MVP to test its assumptions, Color burned through its funding and shut down within two years.

Quibi, the short-form video streaming platform founded by Hollywood mogul Jeffrey Katzenberg, offers another cautionary tale. Within six months of launch, it was clear that demand wasn’t there, especially with free alternatives like TikTok dominating mobile video consumption. By the time Quibi shut down, it had spent most of its funding without proving product-market fit.

These stories of tech startups collapsing after raising substantial funds but failing to build profitable businesses are far from uncommon.

Why investors care about MVPs

Investors aren’t just looking for grand ideas; they need proof of execution. A well-developed MVP demonstrates the problem-solving capabilities, adaptability, and scalability qualities that make it such a good investment. A strong MVP reassures investors that a startup is capable of navigating real-world challenges and adapting based on customer needs.

Airbnb is an excellent example of how an MVP-first approach attracts investment. The founders tested their idea by renting out air mattresses in their apartment and offering breakfast to guests. They quickly validated demand and built a basic website. This early traction allowed them to refine their platform and secure funding from Y Combinator. Without first proving that people would pay to stay in strangers’ homes, Airbnb may never have convinced investors to back it.

Investors also look at MVPs as a sign of adaptability. Markets shift rapidly and startups need to prove they can pivot when necessary. Instagram began life as a location-based social network called Burbn, but early user feedback showed that people mostly used it for photo-sharing. Instead of sticking to the original idea, the founders stripped the platform down to focus purely on images, turning it into the Instagram we know today.

A startup that successfully tests, iterates and refines its MVP demonstrates the kind of flexibility that investors value.

The winning formula: build, test, pitch

The path to a successful startup doesn’t start with fundraising—it starts with proving the idea. Investors don’t just fund ideas; they fund execution, proof of demand, and founders who demonstrate traction and adaptability. In the UAE’s fast-growing startup ecosystem, those who validate their ideas before chasing capital will be the ones who stand the test of time.