Proof of Concept in Software Development: What, When, and Why Your Startup Needs It

Launching a new product is always a risk. You can invest tons of time, money, and human resources into the software development process but end up with indifferent users and failed expectations of your investors. According to the statistics, 90% of startups fail, and 42% of them fail because they don’t meet the market demand.

Proof of Concept is the methodology that can help your business avoid investing resources in a potentially unpromising idea and avoid negative scenarios like bankruptcy and failure.

In this post, we’ll discover what Proof of Concept means in software development, why it is beneficial for businesses, and when you need to use it.

What is Proof of Concept in Software Development

In software development, a Proof of Concept (PoC) is the process of verifying a software concept before you actually start investing in full-cycle software development. It's the initial pre-development stage where you determine if the idea is relevant to the market and in demand.

A Proof of Concept helps to establish the project's vision, technical feasibility, user acceptance, and potential risks before the development process even begins. Typically, a PoC involves a small-scale exercise that confirms the possibility of development and proper functionality before any prototyping takes place.

The primary goal of a Proof of Concept is to validate the viability of a software idea by demonstrating that the proposed system, application, or product will work in real-world conditions before full-scale development commences. A PoC serves as a verification methodology, allowing you to test the feasibility of a software idea on a smaller scale. It's used to gather evidence supporting the project's feasibility in the early stages of development, before significant resources are spent. The PoC is also seen as a methodology implemented in the initial phases of the software development lifecycle to ensure technical feasibility and the ability to solve real-world problems.

Overall, a Proof of Concept is a crucial step in the software development process, involving the creation of a small-scale version of a product or service to confirm its feasibility and functionality before investing time and resources in full-scale development. Early involvement of all stakeholders in the PoC creation process is critical for defining the vision and direction of the final product, as well as for discussing limitations, opportunities, and risks.

When you Need Proof of Concept

Implementing a Proof of Concept (PoC) isn't a one-size-fits-all solution and isn't always necessary at every stage of software development. Sometimes, it's not even needed, especially if you're not validating a new concept but rather introducing changes to an existing product based on customer feedback, revenue analytics, or other already tangible data.

So when is the Proof of Concept needed in software development?

• You’re validating a completely new idea. You have a general understanding of how your new concept will work but lack real-world data to back up your assumptions. In this case, a PoC will help you present your idea to potential stakeholders and persuade them to invest in your product. For example, if you're developing an app with a unique feature unlike anything else on the market, a PoC can help determine if there's a demand for such a feature and what the core elements should be.
  
• You want to add a never-tested-before feature to an existing software. In this scenario, it's crucial to gather sufficient user feedback to avoid losing current customers and attract new ones. A PoC allows you to test user perception of the new feature and confirm its demand and usefulness.
• You’re exploring new ways to enrich the functionality of your software. Thorough research and a series of interviews will help you better understand market demand, weed out non-viable ideas, and focus on the most profitable ones. A PoC can help assess market interest in various feature enhancements and select the most promising.
• You're unsure about the technical feasibility of your idea. Implementing a PoC here will help you eliminate the potential risks of investing resources in a technically impossible project. If there are doubts about whether a specific function or integration can be implemented, a PoC allows for technical experiments to confirm its feasibility.
• You have a limited budget for the initial phase. A Proof of Concept doesn't require a large investment compared to more complex development activities and can help you allocate your budget wisely and better prepare for funding rounds. A PoC is a cost-effective way to validate the viability of an idea before full-scale development.

It's also important to consider situations where a PoC might not be practical. For example, if the idea isn't viable or doesn't align with the company's business goals. Additionally, a PoC isn't necessary if the project is already well-defined and there's no need for concept validation, although it's worth noting that concept validation should always extend beyond internal assessments. In cases where resources like time, budget, and personnel are limited, it might be more efficient to start with a prototype to test the initial concept rather than allocating resources to a PoC.

Finally, if the project is small and insignificant, creating a PoC might be excessive, as the project can be completed quickly within budget and with minimal risk without needing a PoC. A PoC is also particularly useful when creating entirely new, previously unrealized ideas or when adding features with no prior usage examples for comparison. In such instances, a PoC acts as a pilot project, allowing you to test the idea and confirm its practical feasibility.

Why is Proof of Concept Important

Proof of Concept is an optimal solution for startups because it lets you save money, time, and effort by testing and validating your idea with minimum costs. And it should come first in the software development process. PoC helps to make accurate estimations of the resources that will be needed for the development process, as well as pre-check any possible implementation risks.

PoC lets you validate the idea in order to adjust it to the market needs and, consequently, improve fundraising success, which is essential in startup development. Proof of Concept implementation is the key thing you need to join the 10% of successful startups and ensure your product finds the right niche and audience.

Another important reason why PoC should come first in the software development lifecycle is that it lets you timely ‘wipe out’ the concept that is a potential failure. Of course, it never feels good to discover your “brilliant” idea is not a unicorn but a failure with no market potential. But it is always better to find this out before you start investing money and time. This way, you can allocate your development team’s forces for some other project that has more market potential (don’t forget to validate it with PoC, too).

All in all, we can point out the following necessities of Proof of Concept as the first stage of software development:

• Core idea validation. Proof of Concept lets you test the idea viability and potential market demand.
• Another proof for investors. Proof of Concept will persuade potential investors to risk more money to your project, as they will get a proof that your idea is more than bare words.
• Project vision definition. PoC highlights the future project’s requirements, timescope, and risks, so you are able to carefully plan the roadmap and set development goals.

Benefits of Proof of Concept in Software Development

Whenever you plan to enter the market with a new software product, you have to consider the two key “how”:

• How to attract investors to raise funds?
• How to meet the market demand and offer the necessary solution?

Proof of Concept development services can help you solve both of these challenges and give a clearer picture of the future development of your product.

Validate the idea before developing software

PoC allows you to test your application idea in a near-real environment to avoid investing resources in developing software with unknown market perspectives. This way, you can check if your idea has enough potential to become a reality, whether it has enough market potential and user demand, and then make any necessary changes to increase the chance of success.

Launch faster and cost-effectively

In addition to idea validation, the PoC lets you test various development approaches to identify the most rational way and choose the most relevant technology stack. Doing so will help you avoid serious issues like technological incompatibility in the development process and launch the software to the market quickly and cost-efficiently.

Collect user feedback

Proof of Concept is also perfect for conducting market acceptance testing. At this stage, you can collect important feedback from end-users, which, in turn, is necessary to persuade investors and stakeholders. This will help you attract more funds and get more resources to develop your product.

Check technical viability

Implementing Proof of Concept will save you the trouble of facing unexpected technical limitations and issues before the development process starts. This part is very important, as you will be able to identify if your project is viable from the technical perspective and come up with timely adjustments.

Be aware of the product limits and capacities

Proof of Concept may work as a SWOT analysis. Applying PoC to software development helps you collect a clear scope of the project’s limitations, advantages, disadvantages, and further development opportunities. This will make it easier to roadmap the post-release development of your product and set new business goals.

PoC, Prototype, and MVP – Key Differences

To quickly let you see the difference, the title of this part should look like “PoC, then MVP”. In software development, Proof of Concept is the stage that goes before MVP, because PoC involves minimum development activities.

A PoC, a prototype, and an MVP are three distinct yet often sequential approaches to validating the core assumptions behind a software idea. Each has its unique goals, focus, development stages, target audience, and outcomes.

Let’s take a closer look at how the product development process goes:

• Proof of Concept – serves to find out if the new feature/software/business idea will work.
• Prototype creation – serves to show how this is going to work; it is not ready for sale yet.
• MVP development – build the version of the product, that brings certain value and could be sold to the real users.

These parts cannot be interchanged, and each following one involves more resources than the previous. And for the same reason, you shouldn’t omit PoC in order not to start prototyping and MVP development of something that may not even be working.

Purpose:

• PoC: The primary purpose of a PoC is to verify whether an idea or technology is feasible. It aims to confirm the technical viability and validate the possibility of achieving specific aspects of the concept. The key question is: "Can this be done?"
• Prototype: A prototype is designed to demonstrate the functionality and user interaction of the product. It shows how the product will work. The key question is: "How will this work?"
• MVP: An MVP, on the other hand, aims to validate market demand and gather feedback from early users about a basic but functional version of the product. Its goal is to release a functional product with a minimal set of key features to obtain feedback and validate the product's viability in the market. The key question is: "What do users think of the product?"

Focus:

• PoC: Focuses on technical feasibility and confirming the ability to implement specific aspects of the concept.
• Prototype: Is oriented towards design, user interface (UI), and user experience (UX). It demonstrates the look and feel of the product.
• MVP: Concentrates on delivering core features that provide value to early users and allow for validation of the product's viability in the market.

Development:

• PoC: PoC development typically takes a short time and requires minimal effort, just enough to demonstrate the principle. It can often involve mockups or even avoid writing complex code.
• Prototype: Requires more effort as it represents a working model of the software, albeit with limited functionality. The primary focus is on the user interface and interaction.
• MVP: Is the most complete of the three, as the development team creates a working product with all the core features, ready for initial users.

Audience:

• PoC: Is usually intended for internal use, investors, or key stakeholders to validate the concept.
• Prototype: Can be shown to internal teams, stakeholders, and potential users to gather feedback on the design and usability.
• MVP: Is intended for early users and potential customers to validate the product-market fit and gather valuable feedback.

Outcome:

• PoC: The outcome is a limited demonstration, mockup, or technical specification that may not be user-facing.
• Prototype: Represents a working model of the product with limited functionality, with the main goal of visualizing the concept and testing interaction.
• MVP: Is a basic but functional product with key features, ready for use by initial customers.

Comparative Table:

Relationship Between Stages:

PoC, prototype, and MVP are often used sequentially in the software development process. Typically, a PoC precedes a prototype, which, in turn, precedes an MVP. Each stage provides valuable information and helps mitigate risks on the path from idea to a finished product. Skipping the PoC stage can lead to developing a prototype and MVP for an idea that is fundamentally flawed. Each subsequent stage requires more resources, so early validation of the concept with a PoC can save time and money in the long run.

A Step-by-Step Guide to Creating an Effective Proof of Concept

Proof of Concept creation does not limit you to sticking to any specific rules or guidelines. Instead, you have plenty of room for creativity and the possibility of adjusting the process to your special needs. Just be sure to cover the key aspects that will let you validate your idea’s viability, adjust the development processes, optimize costs, and ensure successful market entry.

At Emerline, we established a 5-step PoC development framework that we’ve been successfully implementing for over a decade of work with startups. It allows us to efficiently address the major concerns of your startup — limited budgets, tight deadlines, technical constraints — helping you prevent them at the pre-development stage.

Step 1: Identify the problem

This initial stage involves conducting thorough market research to understand existing needs and identify high-demand solutions. It's crucial to clearly articulate the problem you're aiming to solve, as well as the potential opportunities you want to realize. This requires a deep understanding of the market, your target audience, and a comprehensive analysis of existing solutions. You also need to pinpoint the key needs that the software being developed should address.

To do this, engage in conversations with a representative sample of potential users and stakeholders to deeply understand their pain points and how these issues impact their work, lives, or overall experience. At this stage, it's important to answer the following key questions:

• What are we trying to achieve?
• What will be the added value of our solution?
• What are the success criteria for our software product?
• What are our time constraints?
• What resources do we have available?
• What should our workflow look like?
• Are there comparable solutions on the market?

Step 2: Brainstorm a solution

Once the problem is defined, it’s time to brainstorm how you can solve it with your software. This stage involves developing a method for solving the identified problem that considers the balance between feasibility, implementation timelines, available technologies, existing competition, anticipated costs, and potential return on investment (ROI). Conduct a thorough brainstorming session to explore various ways to address each identified problem. Typically, there are multiple approaches to solving each challenge. After brainstorming, it's necessary to analyze each potential solution in terms of its cost, competitive advantages, implementation timeline, potential technological hurdles, and overall ROI. Considering the technical feasibility of the proposed idea is equally important at this stage.

Step 3: Develop a Compelling Proof of Concept

This stage involves consolidating all the information gathered from the research and brainstorming phases into a well-structured and presentable PoC. Your PoC should be concise, developed within a tight timeframe, and focused solely on proving the core assumptions underlying your idea. It's crucial to clearly define the scope of your PoC, including the specific features and capabilities that will be included in the demonstration, as well as the methods for testing them.

Step 4: Present your PoC

This step involves persuasively presenting your PoC to potential investors and key stakeholders with the goal of securing their support and gathering valuable feedback. At this stage, you need to clearly define the success criteria that will be used to evaluate the effectiveness of your PoC. Carefully collect all the feedback received and be prepared to make reasonable adjustments based on this input.

Step 5: Plan a Strategic Roadmap

After the successful approval of your PoC, the next step is to develop a detailed plan for the subsequent development stages, such as prototype creation, MVP development, marketing strategy definition, and planning future product updates. The Proof of Concept plays a crucial role in the roadmap planning process, as by this point you already have a clear understanding of the key business challenges and potential development hurdles.

Throughout this entire process, it's vital to actively involve all stakeholders and gather feedback from early users to ensure that your PoC aligns with their expectations and business goals. It's also essential to thoroughly document the entire PoC creation process, the results obtained, and the lessons learned, in order to effectively present and summarize the findings for informed decision-making regarding the project's future direction.

Proof of Concept Examples

To let you better understand the Proof of Concept methodology, here are some examples of how the PoCs of some famous and successful businesses looked like. As you will see, formats of PoC may be different. The only thing that matters is that the format should match with your business specifics.

Dropbox – video

In 2007, cloud computing and storage technologies were new to people. So, simply entering the market with the cloud file-sharing service was a huge risk. Instead, Dropbox first created a video walkthrough of their service functionality to show potential customers and investors how all of this is going to work. As you can see, this approach let the company estimate the market demand and user feedback to further develop a world-famous product.

Canva – website

In 2013, digital design platforms were not user-friendly and required deep training for anyone to start using them. Before actually launching a simplified and easy-accessible design platform, Canva founders launched a website for school yearbook design business to prove the demand for simple design platforms. The idea became a success, and what was a school yearbook builder website became a PoC to persuade investors.

Amazon Go – employee live testing

Amazon decided to test their Amazon Go shops on their employees instead of doing a difficult and time-consuming estimations and calculations. In this case, the internal live testing was a success because all the Amazon employees were actually potential users of their new service. So, several rounds of testing let Amazon come up with the right set of tools that made Amazon Go a success.

Summing it up

Proof of Concept has a big strategical meaning in software development. It helps you check and validate your ideas before investing money in the development process, adjust the business goals to the market demand, and reallocate the budget to gain maximum payoff. Feel free to ask us any questions regarding the PoC development — our team is always here to help.

Frequently Asked Questions

What is a proof of concept in software development?

A PoC is a preliminary exercise to validate the technical feasibility and practical potential of a software idea before full-scale development.

Why is a proof of concept needed in software development?

To mitigate risks, validate assumptions, secure stakeholder buy-in, optimize costs, and ensure market relevance before significant investment.

What should a proof of concept include?

A clear problem definition, proposed solution outline, core functionality demonstration, key assumptions to be tested, and defined success metrics.

What are the main steps to creating a proof of concept?

Identify the problem, brainstorm the solution, build the PoC, present the PoC, and plan the roadmap.

What value does a proof of concept create?

Reduces development risks, validates technical feasibility, confirms market interest, secures stakeholder confidence, optimizes resource allocation, and informs future development.

Who will use the product developed after the proof of concept?

The target end-users identified during the initial problem definition and market research phases.

What problems can arise during development after the proof of concept?

Scope creep, unforeseen technical complexities, evolving user needs, and misalignment with the initial PoC findings.

How is an idea funded after passing the proof of concept?

Through internal budget allocation, angel investors, venture capital, grants, or other funding sources, often leveraging the validated PoC.

What are the three main problems that a proof of concept solves?

Technical infeasibility, market irrelevance, and lack of stakeholder confidence.

What are we trying to achieve with a proof of concept?

To validate the core idea's viability and gather evidence to support further investment.

What are the success criteria for a software product?

Market adoption, user satisfaction, achievement of business goals, technical performance, and maintainability.

What is the timeline for a proof of concept?

Typically short, ranging from a few weeks to a couple of months, depending on complexity and scope.

What resources are needed for a proof of concept?

A small team (developers, designers, analysts), necessary software and tools, and a defined timeframe and budget.

What should the proof of concept workflow look like?

Problem definition -> Solution ideation -> PoC development -> Presentation & feedback -> Roadmap planning.

What is the goal of a proof of concept?

To demonstrate the feasibility and potential of a software idea.

What are the different types of proof of concept?

Technical PoC (focus on feasibility), Functional PoC (demonstrates core features), and Business Value PoC (validates market potential).

What happens after the proof of concept?

Based on the PoC results, the project may proceed to prototyping, MVP development, be iterated upon, or be shelved.

What is the difference between a proof of concept and a prototype?

A PoC validates feasibility, while a prototype demonstrates functionality and user interaction.

What is the difference between a proof of concept and an MVP?

A PoC tests core assumptions with minimal development; an MVP is a functional product with core features for early users.

When should you not create a proof of concept?

When the idea is clearly unviable, doesn't align with business goals, the project is well-defined, resources are severely limited, or for very small, low-risk projects.

How long does it take to create a proof of concept?

Varies significantly based on complexity, but typically aims for speed and efficiency, ranging from weeks to a few months.

What are common mistakes when creating a proof of concept?

Over-scoping, focusing on irrelevant features, neglecting clear success metrics, insufficient user feedback, and inadequate documentation.

What tools can be used to create a proof of concept?

Wireframing tools, low-code/no-code platforms, prototyping software, and basic development environments, depending on the PoC's focus.

What is the difference between a proof of concept and a pilot project?

A PoC validates feasibility; a pilot project is a small-scale deployment to test the product in a real-world environment.

How to choose the best approach: PoC, prototype, or MVP?

Consider the project's stage, level of uncertainty, available resources, and the specific validation goals (feasibility, usability, market demand).

What is PoC in innovation?

In innovation, PoC serves as an early-stage validation to de-risk new ideas and technologies before significant resource commitment.

How does PoC support risk management?

By identifying potential technical challenges and market viability issues early on, allowing for course correction or project termination before major losses.

Why use PoC in software development?

To ensure that development efforts are focused on viable and valuable solutions, ultimately increasing the chances of project success.