The startup world is full of not only excitement but also uncertainty – after all, the early-stage venture failure rates are around 90%, with 21.5% of businesses failing in the first year and 30% in the second year. While there’s no one magical formula for success, we believe there are certain opportunities and hardships that most founders will eventually come across, regardless of the industry they’re in and the solution they’re planning to deliver. And what better way to identify them than by talking to successful entrepreneurs?
When working on our State of early-Stage Startups 2021 report, we sat down for a chat with Truman Du, the co-founder and CEO of Genuine Impact. We discussed prototyping, the value of user feedback, and the key factors for successful crowdfunding. So if you’re looking for actionable insights and pro tips from an experienced founder… you’ve come to the right place!
Let’s start with the birth of your app. One of the first stages of the development process was prototyping. Was it your decision to go for it, or was it the suggestion of your tech vendor?
To give you some background, Genuine Impact dates back to 2018, and it’s an app-based product that helps new investors better research their new tech investments. Our goal is to give self-made investors the tools so that they know how to find a good investment, no matter where they live. Of course, many new brokers like Revolut or Robinhood are app-based and offer an intuitive UX to their users. But what’s really missing on the market and what new customers need is a list of tools that they can get to know very easily and quickly. So the market need is more about education than just simple buying and selling securities. And that’s the need we’re trying to address.
But let’s get back to prototyping. The first step you need to take before embarking on this adventure is to learn whether the problem you have in mind needs to be solved. You need to find out if that’s something another company can easily do by adding a new feature into their product suite or if this is a holistic solution that people are willing to pay for. That’s essentially how we monetize our product, through B2C subscriptions.
So, step one is to find out exactly what kind of problem you’re trying to solve. We did that by speaking with the target audience and conducting user research. For us, the solution was to give people the tools, so that they know precisely how to analyze a stock.
We knew the UX had to be simple, intuitive, and efficient. The alternative for our end-users is to research a company by browsing through Google Finance or various reports – but that’s a very clunky and outdated way to get things done. That’s another issue we had to address, hence the idea of presenting and calculating all of the financial data that matters in a single place. We’ve accomplished that with an intuitive user interface developed during the prototyping stage.
We started with me drawing up everything up on a piece of paper. Then, we reached out to a UK-based agency, which translated my vision into something that a developer can understand, e.g. branding, spacing, and, most importantly, the user journey. That was the prototyping stage, and it took us around 2-3 weeks. The very outcome I wanted to achieve was having something tangible to show to the user, to walk them through the user journey. It didn’t need to look fancy, but the core of the solution had to be easily understood by the user.
That’s how I’d describe the start of the company in terms of defining the problem, generating a solution, drawing everything on a piece of paper, and then hiring someone. I am not a designer myself, so getting someone to translate my product-centric perspective into a prototype was only natural for me.
Do you think that you managed to find this problem-solution fit using a prototype you’ve created?
That can only be proved when the target audience starts to pay or use the product a lot. So far, that’s been the case for Genuine Impact, so the answer is yes. At the development stage, however, it wasn’t so clear because no one was going to pay for a prototype only.
Moreover, a prototype is only a part of the user journey. It’s like 20% of the product while the remaining 80% involve onboarding, navigation, etc. The truth is, you only get to the core of the solution after playing with the app for some time. So, if you asked me this question in 2019, I’d say maybe. And now I can proudly say that problem-solution fit has been proved.
You mentioned that you showed your prototype to your users. Did you present it to angel investors or VC companies as well?
Let me draw a simple analogy first. Let’s say you’re building a house. You start with the roof, the ceiling, the windows – and you could compare that to the product we had in the early days. It was like a house, but it lacked the fancy stuff, like ventilation or the interior decoration. Why? We adopted the time- and money-saving approach because people would use our app without these fancy features either way.
So, basically, we first asked ourselves about the must-haves and good-to-haves within the app. Then, we ditched the latter because we didn’t have enough resources to implement them. We built the first version of the app with that mindset and launched it as quickly as possible. Within the first few weeks, it was downloaded a few hundred times, and that was the moment when we were ready to approach investors.
I believe that the investors look for answers to the following questions: does this solve the problem, and is the problem big enough. They don’t really care about a fancy UI, but they care about your solution having core features in place. That’s why we launched our app before crowdfunding. We used the first iteration of the product to raise half a million pounds back in the summer of 2019. This allowed us to answer the two above-mentioned questions.
After working with Merixstudio’s team, we took the app to the next level with a much better-looking user interface and smoother onboarding, to name a few. So to answer your question, we did initial fundraising and got the first couple of hundred users through that very basic product.
Is there something that you could’ve done better regarding the prototype? Would you change something now that you have more experience?
We had a clickable prototype at the beginning, but it didn’t cover the entire user journey. Would we change anything? Probably not. We would just stick with what we’d done in the past.
I think the biggest misunderstanding is assuming that the prototype needs to look perfect when you don’t have the time or the money for that. You also need to remember that prototype is only one part of the conversation with either users or investors. If we’re talking about fundraising, the team is just as important. You can bring the most fancy-looking UI to the table, but if the team is terrible at presenting the problem, the solution, and the whole logic behind it, it will most likely fail. If we had more time and more money, we would make the prototyping stage more advanced, but that simply wasn’t the case in 2019.
Are there any lessons learned for the early-stage startup founders that you would like to share?
Sure, and let me point to the marketing-oriented ones as I am not a marketing person myself, and these are the lessons I learned myself. My background is in investment management, which is all about the solution to the product. I know the problem and the solution very well, but the distribution and marketing are not my cups of tea. And I’m still learning that as the company grows.
So, when it comes to anything I need to do a much better job at, it’s thinking about how to get more people to know about Genuine Impact and the problem we’re trying to solve. It may involve posting more on Twitter, Product Hunt, or other small communities to find potential users. These are the areas that I should’ve done much more of in the early days.
Right now, we know where to find a lot of these users – one way is to search “stock investing” on YouTube. It sounds very simple now, but it didn’t pop into my head right away. Then, there’s looking for potential users on Instagram, YouTube, or Twitter. These things are time-consuming, but ultimately, they result in getting more users to try out the app.
On your website, there is a community section in which users share their feedback about the application. Would you say that implementing this feedback is the reason why your app is growing in popularity?
It’s quite an interesting question because we don’t spend much time on the community section anymore. We did in the past as we wanted to speak with our users, but it turned out that it’s not necessarily the place where people go.
Many current and potential users prefer to engage with us one to one, e.g. via Intercom. I think it’s because they don’t want to make everyone aware of their question, which is just normal human psychology. The other medium for us is the WhatsApp group, which helps us with user testing. We also have a growing Instagram account where the engagement is much higher than at the community section on our website.
But to answer your question about how the app is getting more popular, it boils down to how we engage with the investing influencers. You can find them on YouTube, TikTok, and Instagram, where they post investing videos. Building long-term relationships with these influencers works for us because when you, as a prospective user, see someone posting a video using content or assets from a given app, you naturally trust that person. You get social proof.
What kind of changes do your users suggest? Are there small tweaks you’re already aware of, or are these some groundbreaking innovations that you haven’t thought of?
To be honest, many suggestions they have aren’t totally unexpected. But since we’re a small company, we can’t introduce all of them at once. To give you an example, a lot of people are asking about live pricing for our stock. That’s something you can easily google. When coming across such a request, we ask ourselves whether it’s something that users would like to pay for. If the answer’s no, we don’t treat it as a priority.
We only work on features that we think genuinely differentiate us. I think that’s the key difference between the company at our stage and more mature businesses that can afford to spend money on features that are not top-priority. We spend money and time on functionalities we can justify charging people for. That’s the basic principle. If users won’t pay for something, we won’t introduce it right away.
That makes sense because developing such features could be seen as kind of a wase, couldn’t it?
Yes, to some extent. It would still be valuable to the user, but if it’s something a user can easily find in three other places, we won’t treat it as a priority.
When you started Genuine Impact, did you know that crowdfunding is the way to go immediately?
We thought about crowdfunding already in the early days. On the one hand, it’s just a popular thing to do in the UK. On the other hand, it’s easy if you want to combine fundraising and getting users for your app. As an early-stage founder, you may want whoever uses your app to be an investor as well. That was our preference, we wanted to align customers and investors. Crowdfunding was a natural way to do that.
In 2019, we had a product, a few hundred users onboard, and we knew Genuine Impact might become a big thing in the future. It was a natural first step for us. Fast-forward to the end of 2020, we raised almost a million pounds in the second crowdfunding round. This second round was special for two reasons: us being at the seed stage and the pandemic hitting.
Covid-19 made seed funding much more challenging, not only in Europe but also globally. New investments are happening on a series B or C level, but fundraising grew more difficult for the seed stage companies. One reason is their inability to meet the VC investors in person, and VC fundraising is the game of getting to know people and teams. At the early stage, you rarely have enough traction to justify series A, so it’s challenging to get a proper VC commitment. 2020 made it even more difficult.
Crowdfunding appeared to us as a brilliant way to raise funds in 2020. When crowdfunding, you don’t get to meet investors in person but use a dedicated online platform. That’s a natural advantage. The outcome was very satisfactory as we raised more than we wanted. Now I can say that it was the right thing to do.
In the first crowdfunding round, you already had a product and testing users. Would you say that crowdfunding makes sense if you don’t have a product yet?
If you don’t have a product, crowdfunding may not be the best option. It’s an interesting phenomenon, actually. You can raise money from VC if you don’t have a product because you know the right people or are a serial founder. You may not have the team yet, but your idea is brilliant, and you have the connections. I can think of such examples.
When crowdfunding, however, people will ask why you don’t have a product if your company is supposed to be worth investing into. Why should they trust you if they’d never met you and you have no proof of your capability? So I’d say it doesn’t make much sense, but it’s not impossible. If I were to start again, I’d have the product as proof, and I’d be looking for money to grow the solution and the user-base.
Apart from having a product to show, do you have any tips for early-stage funders who wish to gather funds via crowdfunding?
There are some basic ingredients. First of all, you need to find a team as it’s hard for a single founder to grow a business. It’s not impossible, but if you can get together marketers, developers, and other subject matter experts, it can make a difference. Then, you need to have a product, some traction, and some anchor investment to show off. Not to mention that the problem you’re trying to solve should resonate with the target audience. The prospective investors also need to know that there’s a future for the product even if some functionalities are missing.
You said that you talked to users at the beginning of your entrepreneurial journey to validate your idea. How exactly did you uncover the market need?
I had a random conversation with a colleague who lost access to Bloomberg Terminal, a tool that the institutional investors use to research potential investment. This friend of mine changed job, lost access to this solution, and didn’t know how to research companies anymore. I thought that there are hundreds of people with a similar problem. That’s how it all began, with a top to bottom market analysis.
Thank you for an insightful conversation, and good luck to Genuine Impact!
Dream of following in Genuine Impact's footsteps? See how we can help you do that!.