What is Prototyping?
In the previous articles, we have already studied about the proof of concept as well as the minimum viable product concept. However, there is one more methodology that is commonly used in the product development stage after the seed funding has been received. This mechanism is known as “prototyping”. In this article, we will further closely evaluate the concept of prototyping as well as the financial benefits that it offers to entrepreneurs.
Prototyping is the process of creating a visual representation of a product. It is important to know that sometimes the entire product is created whereas, at other times, only a part of the product is created as part of a prototyping exercise.
The prototyping technique is widely used in industries where there is a huge emphasis on user experience as well as the user interface. This is because of the fact that prototypes simulate the actual user interface of the product. Hence, they prove to be more effective since customer focus groups do not have to imagine the interface. Instead, they can interact with an active interface.
Types of Prototyping
Prototyping is used in many different companies and industries. It is also used for many different purposes. Hence, there are several types of prototypes that exist. Details about the most commonly used types of prototypes have been listed below:
- Paper Prototype: A paper prototype is only a visual representation of what a product or service will look like. For instance, in the case of software applications, the paper prototype would show the mockup of the user interface. The various screens, features, and even the colors of the interface can be visually depicted with the help of this technique.
In the case of products, which are not related to information technology, a paper prototype includes the creation of a three-dimensional model which depicts the product in actual life. A lot of the time, there are products such as laptops and tablets which have hardware as well as a software component. In such cases, both types of prototypes may have to be developed in order to clearly communicate the intent of the entrepreneur.
- Horizontal Prototype: A horizontal prototype is a type of digital prototype which is generally created for information technology applications such as software. A horizontal prototype is like an unfinished development. It is widely used at the earlier stages of product development.
A horizontal prototype means that the user interface of the application is created. However, there is no actual backend development that has taken place. This means that the application is just a showpiece that can be used to demonstrate the color schema and functionalities. However, none of the functionalities actually work at this stage. Often, it is made clickable in order to give customer focus groups as well as investors a real feel of the product.
- Vertical Prototype: Vertical prototypes are the most advanced stages of prototypes. This is because they include all the features which are will be used in the final product. Generally, there is a fully functioning user interface as well as a backend that is connected to a database. The only issue is that the database would not have the complete data but only a small subsection of the data which is required only to demonstrate the product features.
Benefits of Prototyping
Prototyping is a fast and effective way to obtain maximum benefits from the product development process. Some of the financial benefits of prototyping have been mentioned below:
- Prototyping helps reduce the initial financial investment. Entrepreneurs do not need to create the entire product. Instead, they can create the prototype to continue with their market research. They can then use this research in order to attract more funds from investors.
- Prototypes help consumer focus groups to have a better understanding of the look, feel as well as the functionality of the product. As a result, they are able to provide better feedback. Entrepreneurs can then use this feedback in order to bring improvements to their products. The prototyping exercise can improve the product at a low cost in less time
- Entrepreneurs are forced to create the product during the prototyping stage. It is not uncommon for companies to make unrealistic assumptions during the earlier stages of product development. Prototyping helps in the rapid identification of the product. Hence, they can quickly identify the design flaws which are present in the product. This helps reduce expenses and is one of the reasons why prototyping is widely used
- Since prototyping requires the creation of the actual product on a small scale, the company also gets exposed to the supply chain. As a result of the prototype, they generally have a better idea about the lead times required to acquire raw materials and other intermediate products.
The bottom line is that prototyping is different as compared to proof of concept and minimum viable product. The three types of techniques can be used in combination by the entrepreneur in order to build a more robust product that has a higher chance of receiving further funding.
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- Seed Funding - Introduction
- Why is it Difficult to Raise Seed Funding?
- Documents Required for Startup Financing
- How Co-Founders Split Their Equity?
- Proof of Concept
- Minimum Viable Product
- What is Prototyping?
- Asset Light Business Model
- Advantages of Asset Light Business Model
- Disadvantages of Asset Light Business Models
- Cash Burn Rate: The Basics
- Managing the Cash Burn Rate
- Startup Financing and Term Sheets
- Key Terms and Conditions in a Term Sheet of Startup Funding
- Red Flags that Investors Need to Look out for in Term Sheet
- The True Cost of Owning a Property
- Valuation of Early-Stage Startups: The Mindset of Investors
- Pre Money and Post Money Valuation
- Start-Up Valuation: Advanced Concepts
- How Pre-Revenue Companies are Valued?
- Valuation Divergence - Meaning and its Importance
- How Do Option Pools Work?
- What are Capitalization Tables?
- Asset Sale vs. Stock Sale
- Financial Models for Startups
- Key Performance Indicators for Startups
- Restricted Stock Options (RSU’s)
- Veto Rights - Meaning and its Importance
- Financial Benefits of Incubators
- What are Unicorns?
- Why Startup Companies are Staying Private?
- Why Unicorn Companies Fail?
- Building a Startup Team
- Bootstrapping: Meaning and its Advantages
- Disadvantages of Bootstrapping
- Revenue Based Financing
- Convertible Notes and Startup Funding
- Pros and Cons of Convertible Notes
- Simple Agreement for Future Equity (SAFE)
- Keep It Simple Securities (KISS)
- Series A Funding
- Series B Funding
- Series C Financing
- Venture Debt in Startup Funding
- Pros and Cons of Venture Debt
- What is Venture Leasing?
- The Freemium Model - Different Types of Freemium Models
- Pros and Cons of Freemium Model
- Scalability and Startups
- Pros and Cons of Scalable Business Models
- Why Do Start-ups Fail After Receiving Funding?
- Start-ups and Arbitration
- What is a Revenue Model?
- Understanding Investor Focus on Burn Rate
- How Investors Evaluate Start-up Ideas?
- Government Regulations Which Impact Start-Ups
- What is a Start-up Accelerator?
- Managing the Operational Metrics of a Startup
- Different Types of Investors
- The Founder’s Dilemma
- Role of Social Media In Start-Up Funding
- Start-Ups and Public Relations
- Red Flags for Start-Up Investors
- IPO: An Exit Route for Start-Ups
- What is Acqui-Hire?
- How to Build a Start-Up that gets Acquired?
- Legal Issues Faced by Start-up Companies
- Corporate Venturing
- How Reverse Pitching Works?
- Aggregator Business Model
- Marketplace Business Model
- Difference between Aggregator and Marketplace Business Models
- Product as a Service (PaaS)
- Benefits of Product as a Service (PaaS) Model
- Disadvantages of Product as a Service (PaaS) Model
- The Co-Working Business Model
- How Co-Working Spaces Make Money?
- Peer to Peer (P2P) Business Model
- The Instacart Business Model
- The Goodleap Business Model
- The Twitter Story
- How Tesla Reinvented the Automobile Industry?
- How Epic Games Changed the Gaming Industry?
- The SpaceX Success Story
- The Stripe Business Model
- The TikTok Business Model
- Zillow Story - The Real Estate Marketplace
- How Business Cycles Affect Start-Up Companies
- Managing Start-ups During an Economic Downturn