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 software concept verification before you actually start investing in full-cycle software development. It is the pre-initial stage of software development, where you find out if the idea is market-relevant and is in demand.

Proof of Concept serves to determine the project’s vision, technical feasibility, user acceptance, and potential risks before the development process starts. In software development, PoC usually includes a small-scale exercise that verifies the development possibility and proper functioning before prototyping.

When you Need Proof of Concept

Proof of Concept cannot be implemented on the spot at any stage of software development. And, sometimes, it is not even needed, as you may not be validating any concept but introduce some other changes to an existing product based on customer interviews or revenue analytics or whatever else already tangible.

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

• You’re validating a completely new idea. You have a vague understanding of how your new concept will work but have no field data to prove your ideas. In this regard, PoC will help you present your idea to potential stakeholders and persuade them to invest in your product.
• You want to add a never-tested-before feature to an existing software. In this case, make sure to collect enough user feedback in order not to lose existing customers and attract enough new users.
• You’re exploring new ways to enrich the functionality of your software. A thorough research and a series of interviews will help you better understand the market demand to cut out the unviable ideas and focus on those profitable instead.
• You are not sure of your idea’s technical feasibility. Implementing PoC here will help you eliminate the possible risks of investing resources in a technically impossible project.
• You have a limited budget for the initial phase. Proof of Concept does not require much money in comparison to more complicated development activities, it can help you wisely allocate budgets to be better prepared for funding rounds.

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 vs. 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.

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.

5 Steps to Create 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

The idea is only viable when it solves the problem, i.e., deals with your target audience’s pains. At this stage, make sure to research the market and understand what solution will be of high demand.

Step 2: Brainstorm a solution

Once the problem is defined, it’s time to brainstorm how you can solve it with your software. Think up a method that will be the best combination of feasibility, timeline, technological capabilities, competition, implementation costs, and ROI. Remember that your goal is not only to develop a software solution that will cover the client’s needs but also to create a new opportunity for your business growth.

Step 3: Build a PoC

Designing the actual Proof of Concept means accumulating all the information you collected during the market research and the brainstorming phases. Make sure you have considered all the necessary aspects to make your PoC ready to present to investors.

Step 4: Present your PoC

The presentation stage is your chance to persuade potential investors and stakeholders to give your idea a chance to become a real product. Collect the feedback you receive from the audience and make adjustments if they are reasonable.

Step 5: Plan a Roadmap

After your PoC has been approved, you can proceed with planning the next development steps like prototyping, MVP design, marketing strategy, further upgrades, etc. Proof of Concept helps a lot in roadmap creation, as you are already aware of the key business and development challenges.

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.