Minimum Viable Organization – MVO

End of 2022 and 2023 were very hard for early stage companies. And this trend continues in 2024 as well.
Lack of VC funding and cost cutting from customers put a huge pressure on the runway and sustainability of many businesses. Metrics for raising another round on the other hand increased, pushing many founders to hard decisions. If it was 10k MRR in Seed in 2020-2021, now it is more around 50k. Similar in Series A, from 1M ARR more to 2-3M ARR (not applicable sector-wide).

Thats the reason why we see so many bridge rounds nowadays, Seed extensions, Seed+, Pre-seed extensions.

The sooner founders understood that their business needs to survive the current macro situation by emphasising more on sustainable growth or break-even than on fast growth and spending, the better. Prolonging their runway in a market where probably every competition has the same problem and not everyone will successfully solve the cash crunch and survive.

When speaking to founders raising nowadays, some of them are thinking about getting close to break-even even in early stage at Seed. This was unheard of 2-3 years in the past. Of course, this is not possible for some sectors as bio, deep-tech, HW related business.

The concept of Minimum Viable Product is well known.
Early version of a product with just enough features to be used by early customers, validate, provide feedback and ideally pay.

Ever heard of Minimum Viable Organization?

An organization with just enough people, services and processes to support the Minimum Viable Service or Product to validate, get feedback, grow sustainably towards future organizational development.

Food for thought for founders – what is your Minimum Viable Organization? What kind of monthly burn is it?

What is the most lean version of your company to provide just enough services and cover just enough processes for your business to sustain until the next fundraising round or break-even point? Because if you really believe what you are working on is important and it will have it’s place on the market, your number one priority is to survive.

Author: Andrej Petrus, Head of Investment Committee at ZAKA VC