Why VCs Don't Fund MVPs? (And What You Need to Raise Money)

Apr 1, 2025

Startup founder struggling to raise VC funding after building MVP, illustrating the gap between building and proving traction.

You built your MVP.
Maybe even hacked it together during late nights,
You launched it.
Posted it everywhere.
Told your friends.

You think, "Now it’s time to raise money. VCs will love the potential."

But nothing happens.
Except a few awkward "Keep us updated!" replies that mean no.

You're not alone.

When Airbnb's founders first tried raising $150K, five out of seven investors said no.
Two didn’t even bother replying.
(Source: Paul Graham's blog)
Dropbox raised its first money not with a working product — but with a two-minute video that explained the dream.
Thousands signed up to try it.
(Source: Drew Houston’s Startup Lessons Learned)
Clubhouse?
They raised $12M from Andreessen Horowitz — when they were still invite-only.
But early users weren’t casual — they were addicted, spending hours inside the app daily.
(Source: TechCrunch article)

1. MVPs Aren't Proof: Why VCs Want Traction

In 2024, launching an MVP is easier than ever.

No-code tools. AI builders. Fast prototyping.

Everyone can build something.
Very few can prove people want it.

VCs don't fund ideas.
They fund traction.

📊 Startup Funding Reality Check

Stage	Odds of Raising VC Funding
MVP / Idea only	~0.1% chance (Forbes Source)
MVP + Real Users	2.5× higher chance of funding
MVP + Early Revenue	3–4× higher chance (First Round Source)

2. What VCs Really Fund: Growth Signals, Not Just MVPs

Imagine being a VC.

You see 100 decks every month.
Everyone says, "We built something cool."

But very few show:

Real customers.
Real usage.
Real growth.

That’s why post-2022, VCs raised the bar.
Now, most Seed rounds require $250K–$1M in revenue to even start conversations.
(Source: Pitchbook Global Venture Report 2023)

VCs don’t want to fund guesses.
They want to fund acceleration.

3. MVPs Are Entry Tickets — Not Funding Guarantees

Having an MVP means you’re allowed to play the startup game.
Not that you win yet.

The real test?

Do people use it?
Do they come back?
Do they tell others?

If yes, you’re ready to raise.
If not, you're still proving.

🧩 Simple Test for "Are You Fundable?"

Question	If "Yes"	If "No"
Are users active weekly?	Ready to pitch investors	Focus on retention first
Do you have early revenue?	Ready to pitch investors	Prove monetization first
Are users referring others?	Ready to pitch investors	Strengthen product-market fit

4. What Investors Look For Before Funding Your Startup

Here’s what real investors look for beyond the MVP:

✅ Users:
Even a few thousand real users (consumer apps) or a few paying pilots (B2B).

✅ Retention:
If 30%+ of users are still active weeks later, you’re golden.
(Source: NFX Retention Benchmarks)

✅ Early Revenue (Optional but Massive Boost):
$5K–$10K/month MRR is a strong green light.
(Source: Docsend Startup Fundraising Index 2024)

✅ Engagement:
If users are spending hours, not minutes, on your product (like Clubhouse users did).

✅ Buzz:
If your users are sharing you without paid marketing, you’re onto something.

[MVP] → [Prove people want it] → [THEN raise money]

Final Thought

Building is table stakes.
Proving is the real game.

If you're at MVP stage, the work isn't over — it's just begun.

Focus on:

Real usage.
Real love.
Real momentum.

When you have that,
the money will follow.