Connect with us

Private Equity

Is the Lean Startup concept of MVP dead?

“After the crash, venture capital was scarce to non-existent. (Most of the funds that started in the late part of the boom would be underwater). Angel investment, which was small to start with, disappeared, and most corporate VCs shut down.… Continue Reading

The post Is the Lean Startup concept of MVP dead? appeared first on VC Cafe.

Avatar

Published

on


“After the crash, venture capital was scarce to non-existent. (Most of the funds that started in the late part of the boom would be underwater). Angel investment, which was small to start with, disappeared, and most corporate VCs shut down. VC’s were no longer insisting that startups spend faster, and “swing for the fences”. In fact, they were screaming at them to dramatically reduce their burn rates. It was a nuclear winter for startup capital.”

Steve Blank, “Is the lean startup dead?”

The Lean Startup movement started out of necessity. In a capital scarce environment following the Dot Com crash, startups needed to do more with less and survive long enough to generate revenue. Most of the Lean Startup principles remain true, as described by Steve Blank in The Lean Startup Changes Everything:

  • Business Plans are dead: Startups are a series of hypothesis that need to be tested. Ditch the business plan and when assumptions are proven wrong, pivot.
  • Customer Development: Build a product your customers want (vs. what you think they might need) by talking to customers and testing every aspect of the product features, pricing, etc. Start by focusing on the users who’s need you solve the most, they will be your early adopters.
  • Agile Development: launch an MVP early and iterate quickly. Every startup has limited time to find product-market fit before running out of cash and speed is an important element in survival.

Maximum Viable Product

An MVP was supposed to be launched as early as possible. “If you’re not embarrassed by the first version of your product, you’ve launched too late”, was Reid Hoffman’s advice.

But when it comes to launching a Minimum Viable Product (MVP) these days, as incremental and iterative prototypes, things have changed significantly:

  • Capital abundance: There’s never been more seed capital in the market. Startups that had to be cash constrained before can afford to raise capital in a number of ways and acquire resources pre-launch
  • Improved infrastructure:
    • Better tools – The rise of no-code and improved cloud infrastructure across every aspect of software development, marketing and design, make possible to launch prototypes much quicker, reducing the barriers to entry for competitors
    • Better targeting – Advances in adtech, the proliferation of social media and lookalike tech make it easier to target users
  • Bigger markets / higher stakes:
    • B2C – Nearly everyone on the planet is connected to the Internet via smartphones increasing the potential audience for technology massively
    • B2B – ‘Digital transformation’ is accelerating Enterprise adoption of tech. Single users can test enterprise software using a credit card.

In 2020, there is no second chance to make a first impression. With a growing number of new startups, first mover advantage quickly fades away. Brand loyalty is low, as it takes time to build a brand, and creating emotional attachment to a product is especially hard if the product is half baked.

The MVP needs to be more viable than minimal. It may not need all the bells and whistles, but it needs to look good, feel good (UI/UX) and do what it promises on the tin. If you can afford to make an MVP look and feel great, even at the expense of time to market or cost, why compromise?

Cash (alone) isn’t king

Capital resources alone don’t do the trick. In 2018, Quibi (back then called NewTV), raised $750 million in seed capital pre-launch (the service went on to raise an additional $1 billion ahead of the product launch in March 2020). Quibi didn’t stop to test the hypothesis with a lean startup approach. Well capitalised, Quibi could afford to hire the best talent, outspend the competition and launch a ‘Maximum Viable Product’ worthy of having the potential to beat Netflix, Amazon Prime Video and a number of other streaming wars competitors (NBC’s Peacock, Hulu, HBO Max, Disney+ and Youtube). The jury is still out on Quibi, and one has to keep in mind that producing quality content is expensive and takes time, but money alone didn’t drive adoption. To be fair, it’s also highly unlikely that a minimum viable product approach would have worked here either. It had to be good enough to begin with.

How Covid-19 changed things

It’s hard to predict the true shape of the recovery. Some might claim that the world economy saw its shortest recession in March, and others claim we’ll experience a “W” shape recovery with peaks and troughs or a long U shape recovery. In the endless survey results published, results often contradict one another, but one stat that got stuck in my mind is a survey of Fortune 500 CEOs by Forbes, where the large majority of respondents expected things to go back to pre-Covid-19 levels only in Q1 2022.

At the risk of sounding too conservative, what matters for startups now, as venture capital becomes less available and consumer spending tightens, is adaptation and survival. If things aren’t going the way you planned, consider what hypothesis needs to change. I was reminded recently that in the jungle it’s not the strongest that survive, but those who adapt the best.

In conclusion, I believe most of the Lean Startup isn’t fully dead. The core principles remain true, but I’d argue that the standards for the MVP have gone up. The fundamentals (unit economics/ margins, CAC>LTV, the importance of retention) are even more important now. Growth is necessary, but so is efficiency in spending and reducing churn. In addition, startups need to take more things in consideration when going to market with a new product. Perhaps the next thing that needs to be born out of necessity is ‘Lean Marketing’, but that’s for another story.

Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, media, data and commerce. We are backed by some of the world’s leading media companies.

I’m a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first physical hub for startups.

I’m also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we’ve built 8 schools and 31 libraries in the developing world.

Eze Vidra
Latest posts by Eze Vidra (see all)

Source: https://www.vccafe.com/2020/07/26/is-the-lean-startup-concept-of-mvp-dead/

Private Equity

Lorax Capital Partners pulls in $142m for its sophomore fund

Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

Avatar

Published

on

Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

The fund, LCP II, has a target size of $250m and will focus on midcap companies in Egypt that are focusing on local consumption and production as well as financial inclusion.

Lorax will also back companies that are looking to expand regionally.

The investor aims to implement high-quality governance and environmental and social practices within portfolio companies and help them increase their value creation.

There have been five LPs to commit to Lorax’s new fund, so far.

Lorax Capital Partners director of operations Adnan Razzak said, ”We appointed Apex due to their strong reputation and ability to provide the all-inclusive fund administration, accounting and investor reporting services required across multiple jurisdictions.

“We have been particularly impressed with their ability to guide us through regulatory challenges and our decision to domicile the fund in the Netherlands. Our management team has an unmatched track record in sourcing, executing and managing transactions in Egypt and Apex’s support will enable us to focus on these core competencies.”

Founded in 2015, Lorax is an Egypt-focused private equity firm and over the past five years it has deployed around $175m into five companies.

Last year, Lorax aided Helios Investment Partners and Enterprise Fund with their purchase of a 96.6 per cent stake in agricultural seeds provider Misr Hytech Seed International.

Copyright © 2020 FinTech Global

Source: https://www.altassets.net/private-equity-news/by-news-type/fund-news/lorax-capital-partners-pulls-in-142m-for-its-sophomore-fund.html

Continue Reading

Private Equity

Lobby group for Black women urges firms to ‘go beyond solidarity statements’

The 300-strong group calls asset managers to build an anti-racist portfolio, divesting from companies that benefit from business models that perpetuate racial inequities

Avatar

Published

on

Industry group Black Women in Asset Management has published an open letter calling on institutions to promote racial equity through their portfolios — and take action if companies they invest in do not.

The letter comes as the City took a hard look at racial diversity within its ranks over the summer this year.

“As Black women professionals in the asset management industry, we call on investment firms and institutional investors in our industry to go beyond solidarity statements and instead commit to action, activism, and accountability to dismantle the racial inequities plaguing society,” the letter, released on 26 October, reads.

The death of George Floyd at the hands of three police officers in the US on 25 May and the disproportionate impact the Covid-19 pandemic is having on people from Black, Asian and Minority ethnic backgrounds triggered Black Lives Matter protests around the world, including in London and elsewhere across the UK.

In response, financial services firms and their executives made statements saying the sector could do better and promised to fight for a better society, although activists have said that actions speak louder than words.

BWAM, the industry organisation that counts 300 members, was founded in May 2019 by Jacqueline Taiwo, principal at TowerBrook Capital Partners, and Mariam Akanbi, senior legal counsel at ARCH Emerging Markets Partners.

“Dismantling systemic racism creates a more sustainable and equitable society. However, investment firms have been slow to see racism as a serious investment risk,” said Taiwo in a statement, explaining why the group decided to pen the letter.

The open letter makes five recommendations for investment firms and institutional investors. These include calling on firms to build an anti-racist portfolio, which would entail setting metrics to examine a company’s demonstrable commitment to racial diversity.

Following the research, the group subsequently urged asset managers to divest from companies that benefit from business models that perpetuate racial inequities or target vulnerable communities, citing examples like prison labour and immigration detention.

BWAM also highlights the necessity for communication of expectations to portfolio boards on considering racial implications on strategic decisions, pointing out that this is already the case on issues such as climate change.

Other recommendations include committing resources to encourage young Black women to work in finance as well as advocating for policy change both externally and internally.

“I believe BWAM’s recommendations provide a meaningful framework to bring about long overdue change in our industry,” said Adebanke Adeyemo, general counsel of Vantage Infrastructure and a member of BWAM’s impact committee, said in a statement.

“I am publicly endorsing this letter because I know that many of my peers may not feel empowered to do so. I have been there in my career and I understand it.”

To contact the author of this story with feedback or news, email Bérengère Sim

Source: https://www.penews.com/articles/lobby-group-for-black-women-urges-firms-to-go-beyond-solidarity-statements-20201026

Continue Reading

Private Equity

Dunkin’ reportedly in talks with PE-backed group to go private

The deal worth $8.8bn with Inspire Brands, owned by private equity firm Roark Capital, would delist the coffee and doughnuts chain

Avatar

Published

on

Owner of Arby’s, Buffalo Wild Wings could buy company in deal worth $8.8bn

Dunkin’ Brands Group is reportedly in talks to go private in a sale to private equity-backed Inspire Brands.

The New York Times reported Sunday, 25 October, that Dunkin’, the parent company of the former Dunkin’ Donuts and Baskin-Robbins ice cream, could sell itself for $106.50 a share, a 20% premium over Friday’s closing price, for an implied market value of about $8.8bn. The Times said a deal could be announced as soon as today, 26 October.

Inspire Brands, which is backed by Roark Capital, owns a number of restaurant chains, including Arby’s, Buffalo Wild Wings, Sonic and Jimmy John’s.

In a statement to the Times, Dunkin’ confirmed that there have been preliminary talks over an acquisition, but a deal is not certain and neither side will comment further unless the transaction is finalized.

Dunkin’ Brands has more than 13,000 franchised Dunkin’ locations and about 8,000 Baskin-Robbins locations.

Write to Mike Murphy at AskNewswires@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/dunkin-reportedly-in-talks-with-pe-backed-group-to-go-private-20201026

Continue Reading
Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Saas2 hours ago

Private Equity2 hours ago

Lorax Capital Partners pulls in $142m for its sophomore fund

Press Releases2 hours ago

Společnost Wonderful® Pistachios oslavila narození „Pistácie”, prvního zeleného štěněte na světě s tímto jménem tak, že každému obyvateli italského města, kde se toto štěně narodilo, darovala pistácie zdarma, přičemž majitel tohoto štěněte získá navíc doživotní dodávku pistácií zdarma

Press Releases2 hours ago

ConsumerTrack Celebrates Growth with New Expansion in Hawaii

Venture Capital2 hours ago

Skeletons Out of The Closet, Sharleen Ernster, Podcast#136

Press Releases2 hours ago

Official Trailer Lands For BAFTA-winning Director Anthony Wonke’s New Feature Documentary on Global Brand Johnnie Walker

Press Releases3 hours ago

InPlay Launches World’s Smallest and Software-programming-free Bluetooth Low Energy SoC

Press Releases3 hours ago

Legal-Bay Lawsuit Funding Put Major Focus on Wrongful Conviction Cases throughout Country

Press Releases3 hours ago

Spelling Shed Named to New Mexico Public Education Department’s List of Approved Supplemental Resources

Press Releases3 hours ago

MicroAutomation Announced as Aspect North American Innovation Partner of the Year

Private Equity3 hours ago

Lobby group for Black women urges firms to ‘go beyond solidarity statements’

Venture Capital3 hours ago

The Carlyle Group to acquire Calastone

Press Releases4 hours ago

Matt Bell’s New Book ‘The Rounders and the Tallers’ is a Profound Story of Unity and Forgiveness

Press Releases4 hours ago

Everyone is Invited to the Closing Argument With Gov. Tom Ridge: A 43 Alumni for Biden Event

Press Releases4 hours ago

Karsten Colbert’s New Book “That Was Unexpected” Is an Impassioned Compendium of Heartwarming Poems that Profoundly Answer Life’s Greatest Whys

Private Equity5 hours ago

Dunkin’ reportedly in talks with PE-backed group to go private

Private Equity5 hours ago

Private equity smashes its campaign-spending record with 2020 races

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Saas5 hours ago

Private Equity6 hours ago

London finance job vacancies tumble 54% on Covid and Brexit concerns

Private Equity6 hours ago

UK pension funds to boost renewables, survey finds

Press Releases6 hours ago

Hospital Outsourcing Market Size Worth $679.2 Billion By 2027: Grand View Research, Inc.

Press Releases6 hours ago

Villarreal Law Firm, a Leading Team of Trucking Accident Attorneys in Brownsville, Announces Archive on Trucking Accident Issues

Trending