Product iterations in VC funded technology-based start-ups: Pivoting as critical success factor?

Abstract

Companies developing new products often end up addressing different customers in other markets with products they didn’t envision when the original product development was initiated. This pivoting is even more apparent in start-ups, developing their very first products and searching for their initial product-market fit. Using five case studies, this study seeks to investigate the role of product iterations in finding product-market fit for NTBFs, and the potential role played by venture capital in this process. The case studies show the impact of VC funding on product iterations in NTBFs is diverse. In general, the sooner product iterations happen (if needed), the better. Where product iterations are often required in NTBFs, VC funding provides entrepreneurs with the adequate financial tolerance to explore multiple options towards ultimately validating a tangible product-market fit allowing to start scaling and searching for high-growth.