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Startup ecosystem effect on minimum viable product development in software startups
Nirnaya Tripathi∗
, Markku Oivo, Kari Liukkunen, Jouni Markkula
M3S Research Group, University of Oulu, Oulu-90014, Finland
Abstract
Context. Software startups develop innovative products through which they scale their business rapidly, and thus, provide value to
the economy, including job generation. However, most startups fail within two years of their launch because of a poor problem-
solution fit and negligence of the learning process during minimum viable product (MVP) development. An ideal startup ecosystem
can assist in MVP development by providing the necessary entrepreneurial education and technical skills to founding team members
for identifying problem-solution fit for their product idea, allowing them to find the right product–market fit. However, existing
knowledge on the effect of the startup ecosystem elements on the MVP development is limited. Objective. The empirical study
presented in this article aims to identify the effect of the six ecosystem elements (entrepreneurs, technology, market, support factors,
finance, and human capital) on MVP development. Method. We conducted a study with 13 software startups and five supporting
organizations (accelerators, incubator, co-working space, and investment firm) in the startup ecosystem of the city of Oulu in
Finland. Data were collected through semi-structured interviews, observation, and materials. Results. The study results showed
that internal sources are most common for identifying requirements for the product idea for MVP development. The findings
indicate that supporting factors, such as incubators and accelerators, can influence MVP development by providing young founders
with the necessary entrepreneurship skills and education needed to create the right product–market fit. Conclusions. We conclude
from this study of a regional startup ecosystem that the MVP development process is most affected by founding team members’
experiences and skill sets and by advanced technologies. Furthermore, a constructive startup ecosystem around software startups
can boost up the creation of an effective MVP to test product ideas and find a product-market fit.
Keywords: software startup, startup ecosystem, product idea, minimum viable product, prototype, empirical study
1. Introduction
Software startups are increasingly recognized because of
their potential for developing innovative products that can dis-
rupt the existing market and scaling themselves into unicorns
(value equal to and over $1 billion), with substantial growth5
in terms of the number of employees and revenue genera-
tion [1, 2]. Some examples of successful software startups
known for their popular and innovative products and services
are Google, Amazon, eBay, Uber, and Facebook [3].
The core aspect of software startups is their software-10
intensive product [5]. To find and develop the right product
that can help them become established and successful in the
market, startups need to validate their minimum viable product
(MVP) as quickly as possible until a product–market fit is at-
tained (Figure 2). A product idea and the requirements for it15
are vital during MVP development (Figure 3). A requirements
engineering (RE) process is essential, especially in small soft-
ware companies [6] and software startups [7], as it enables the
quick creation of an MVP in accordance with market needs and
customers’ and users’ requirements for validating the hypothe-20
sis and maximizing the market share. In addition, software en-
gineering plays a key role when the MVP is further developed
∗Corresponding author
Email address: nirnaya.tripathi@oulu.fi (Nirnaya Tripathi)
Figure 1: Key elements in a startup ecosystem [4]
toward a full-fledged software-intensive product that is suitable
to and successful in the market [1].
Despite their potential, many early-stage startups fail within25
two years for a variety of reasons, including a lack of a prob-
lem–solution fit for their product and a failure to learn from
Preprint submitted to Journal of Information and Software Technology June 20, 2019
mistakes during customer and product development [1, 8]. A
suitable ecosystem is needed to nurture a startup from its prod-
uct conception stage, in which an ideal MVP is created, un-
til the product is mature enough to be launched in the market
[9, 4, 10]. The primary objective is providing the necessary sup-5
port for addressing the challenges in the problem–solution fit
and the learning process. In addition, it is important to help the
startup through business/product development to become estab-
lished as a steady, independent organization. The eight impor-
tant elements in a startup ecosystem, which are entrepreneurs,10
technology, market, support factors, finance, human capital, ed-
ucation, and demography (Figure 1), can directly or indirectly
affect a startup [4].
Literature reviews, such as [1, 4, 11], have shown that an
empirical analysis of the relationship between the startup15
ecosystem elements mentioned above and MVP development
in software startups has not been conducted previously. Thus,
there are important questions about this phenomenon that need
to be answered, such as whether MVP development is affected
by the startup ecosystem, and if so, how this occurs. To address20
this gap in the literature and the preceding questions, we design
our main exploratory research question [12] for our study as
follows:
RQ. How do startup ecosystem elements affect MVP devel-25
opment in software startups?
To answer the main research question, we created a theoreti-
cal framework of the phenomenon (Figure 4) based on the back-
ground literature in (Section 2) to determine whether the six30
elements of a startup ecosystem (such as entrepreneurs, tech-
nology, market, support factors, finance, and human capital)
have an effect on MVP development, using the sub-research
questions described in Table 2. These research questions are
addressed with an empirical study in the startup ecosystem of35
the city of Oulu in Finland based upon observations and inter-
views with personnel from 13 software startups and five sup-
porting organizations (Section 3). The Oulu startup ecosystem
has several supporting organizations1to assist startups in the
region and is well know for its startup culture and events (e.g.,40
polar bear pitching2). Our study investigates the MVP develop-
ment process in these software startups and explores the effects
of ecosystem elements on MVP development (Section 4). Fi-
nally, we answer the main RQ, discuss the implications of the
findings and the study’s validity (Section 5), and provide some45
concluding remarks regarding our research (Section 6).
2. Background literature
In this section, key topics related to our study subjects are
described in relation to the main research question, which are
startups and the startup ecosystem, product development and50
1https://www.businessoulu.com/en/frontpage/en/
company-networks- 2/businessoulu-startup.html
2Polar Bear pitching: https://polarbearpitching.com/
Figure 2: Startup development stages (adapted from startup commons)
software engineering, and MVP development in software star-
tups.
2.1. Startups and the startup ecosystem
Blank [13] defined a startup as a temporary organization
in search of a scalable, repeatable, profitable business model,55
whereas Ries [14] stated that a startup is a human institution
designed to create a new product or service under conditions
of extreme uncertainty. An example of the startup development
stages can be seen in Figure 2, as highlighted in the recognized
startup commons3, which include Formation, Validation, and60
Growth. In the Formation phase, the vision and team formation
are established to identify the problem-solution fit that matches
the vision and founder fit. The validation phase includes the
development of MVP, which needs to be validated until the
product-market fit is established. During the growth phase,65
more resources (funding and employee) are needed to support
full-fledged product development from the MVP. Thus, further
investment is needed from investors to support the business ex-
pansion and product development that establish and match their
business model and market fit.70
As mentioned by Paternoster et al. in [1], the word startup
initially appeared in the SE literature in an article by Carmel
[15]. Currently, many researchers4refer to startups that develop
software-intensive products as software startups. Furthermore,
in a recent study by Berg et al. [11], it was shown that there has75
been an increasing amount of literature on software startups.
Crowne [5] described software startups as organizations that
have limited experience, work with inadequate resources, and
are influenced by several factors, such as investors, customers,
competitors, and the use of dynamic product technologies. Sim-80
ilarly, Giardino et al. [16] described software startups as those
organizations focused on the creation of high-tech and innova-
tive products, with little or no operating history, aiming to grow
their business in highly scalable markets aggressively. The au-
thors in [1] provided 15 main themes of software startups, with85
the main ones being lack of resources, low experience, small
teams, rapid evolution, innovation, and a single product. It
3http://www.startupcommons.org/startup-development-phases.html
4https://softwarestartups.org/about/
2
was also mentioned in the same article that 60% of startups
fail within their first five years. Fully 75% of venture capitalist
startups fail for reasons including their high risk-taking nature,
lack of problem-solution fit, and failure to learn from mistakes
[1, 8].5
The word ecosystem first appeared in 1935 in an article on
vegetation theories [17]. Since then, the word has been used in
different fields, such as ecology (e.g., ecosystem ecology, sys-
tems ecology) [18], business (e.g., business ecosystem) [19],
software (e.g., software ecosystem) [20], and entrepreneurship10
(e.g., entrepreneurial ecosystem) [21]. Regarding startups,
various studies describe the startup ecosystem phenomenon
[9, 4, 10]. For example, our earlier study [4] involved a
multi-vocal literature review of the topic to identify the existing
definitions of a startup ecosystem as well as key ecosystem15
elements that can nurture a startup as well as to determine
the role of these elements in startup product development.
After analyzing several definitions of startup ecosystems, we
described a startup ecosystem [4] as follows:
20
A startup ecosystem operates in the environment of a specific
region. It involves actors that can act as stakeholders, such
as entrepreneurs, investors, and other groups of people who
have some self-interest in the ecosystem. They collaborate
with supporting organizations, including funding agencies,25
governments, and educational institutions. Further, they
establish organizations to create an infrastructure in which a
common network capable of supporting and building startups
on a smaller scale is established, increase domestic product de-
velopment, and create new jobs in the country on a larger scale.30
More description on the startup ecosystem elements (Fig-
ure 1) and their possible relation with MVP and product devel-
opment in startups is given in Table 1. Furthermore, other stud-
ies, such as [9, 10, 22], have provided information on the defi-35
nition of startups and elements of a startup ecosystem based on
the authors’ experiences and observations of the phenomenon.
2.2. Product development and software engineering in soft-
ware startups
As noted in previous sections, a product is an essential aspect40
of startups, and several studies investigating different aspects of
products have been carried out (see Figure 3). As can be seen
in Figure 3, Crowne [5] mentioned four phases of product de-
velopment: startup, stabilization, growth, and mature. In the
startup and stabilization phases, a product idea is refined and45
validated to create the final product. In the growth and evo-
lution phases, the product development process stabilizes and
can be tailored to market requirements. Similarly, in their arti-
cle, Wang et al. [23] listed the following six product develop-
ment stages: concept, development, working prototype, a func-50
tional product with limited users, a functional product with high
growth, and the mature product.
Nguyen-Duc et al. [24] discussed the role of the types of
prototypes (throwaway and evolutionary) on the learning of
software startup members, resulting in the product in the star-55
tups. In a gray literature review by Bajwa et al. [25], the au-
thors discussed the types of pivots (in terms of product, mar-
ket, etc.) and factors (internal and external) during the concep-
tion phase (some are applied after the MVP) of the software
startups that later result in the selection of the final product.60
Product-related pivots were zoom-in, technology, platform, and
zoom-out. In another article, Nguyen-Duc et al. [26] proposed
a hunter–gatherer cycle conceptual model with the aim of de-
scribing the evolution of software startups. During the initial
hunting stage, the main emphasis is on the prototyping, which65
includes product idea development, elicitation of requirements,
and development of customers and the market. Once a suitable
product idea and prototype are identified, the gathering process
happens, which involves commercialization of the prototype.
Here, development occurs, where the elicited requirements are70
specified and the prototype is further developed along with au-
tomated testing and system integration and deployment.
With regard to software engineering, once a suitable MVP
is identified and validated, software engineering needs to be
performed to develop a full-fledged software-intensive product.75
This will ensure that the product is technologically advanced
and its features hold value for the customer and market. A key
process area in software engineering is RE, which deals with
elicitation, specification, prioritization, and validation of re-
quirements before the start of the software design and construc-80
tion [27]. Furthermore, these processes need to be managed ef-
ficiently, and thus software engineering management and meth-
ods are crucial. Recent studies such as by Klotins et al. [28] and
Berg et al. [11] discussed on software engineering in software
startups.85
It has been observed that the RE process is of significant
interest in small software companies [6] and software star-
tups because it is central to their software engineering activ-
ities [7]. Our previous research [29, 30] on this topic ex-
plored the effect of competitor’s interaction during the process90
and identified the following most commonly used techniques
during RE processes: internal sources (e.g., for requirements
sources); analyses of similar products (e.g., elicitation of re-
quirements); the use of informal notes (e.g., for requirements
specification); identifying value for customers, products, and95
stakeholders (e.g., for requirements prioritization); and inter-
nal reviews/prototypes (e.g., for validation of the requirements).
Melegati et al. in [31] interviewed representatives of software
startups and found that external factors, such as the startup
ecosystem, founders, team, and market, affect the RE process.100
Gralha et al. [32] conducted interviews with personnel in 16
software startups to determine the requirements evolution prac-
tices in software startups. Similarly, Rafiq et al. [33] observed
that, during requirements elicitation phase interviews, prototyp-
ing, analysis of similar and rival products, and team collabora-105
tion were the most frequently employed methods in their stud-
ied cases.
Software design and construction can overlap during work in
an agile context. Here, software architecture and interface com-
ponents are established, creating a basis for construction to oc-110
cur. It has been observed that software startups prefer to spend
less time on design to reduce development time and shorten the
time before the first product release, thereby gaining a competi-
3
Figure 3: Minimum viable product (MVP) and product development in software startups
tive advantage in the target market. Thus, the primary emphasis
is on the use of development technologies, scalability, and third-
party components [7, 11]. While are few studies that describe
software construction phenomena in detail in software startups
[11], authors such as Edison et al. [34] provide information on5
the use of tools during the construction phase. Furthermore,
the authors in [1, 11] found that some literature on software
startups emphasizes the use of pair programming and software
development standards during the later stages of the software
construction phase as software project complexity rises.10
2.3. MVP development in software startups
Before spending significant resources on product develop-
ment, it is crucial for software startups to create an MVP to
demonstrate to a customer to validate their hypothesis and test
their assumptions. Ries describes an MVP in [14] as15
The MVP is that version of the product that enables a full turn
of the Build-Measure-Learn loop with a minimum amount of
effort and the least amount of development time.
The researchers in [35] explored MVPs and their definitions20
via systematic mapping research. After a systematic analysis of
the 22 definitions, the authors concluded that the most accepted
meaning of minimum in MVP comprises minimum features or
minimum effort. In a recent study [36], the authors observed
that the association between business hypotheses and MVPs in25
two software startups was non-linear, and the process affected
the entrepreneurs learning in terms of hypothesis testing and
pivots.
Studies [37, 38, 39] have highlighted that prototypes could
be used as MVPs since a prototype needs to be developed with30
minimum effort to meet the business objectives and can be used
by the internal team members for testing the product. The same
prototype can also act as an MVP for demonstration to the cus-
tomer or user to accumulate the validated learning. In their
book on interaction design, Preece et al. [40] mentioned that35
a prototype can range from a paper-based storyboard to a com-
plex piece of software and can be used as a means to discuss
the ideas with the stakeholders as well as for team members
communication. A prototype can be low or high fidelity and
4
can be developed from the requirements gathered for the prod-
uct development and serve as an input source during software
design. Considering the limited resources of software startups,
particularly in their early stages, mid-level fidelity prototypes
seem more feasible for use as MVPs than low or high fidelity5
prototypes. The bottom of Figure 3 highlights the scope of our
current study of MVP development (incorporating the product
idea and its requirements), which we extrapolated from the pre-
vious literature and our earlier studies [41, 30], as discussed
below.10
Product idea. For new product development, the idea usually
comes from technology, market requirements, competitors, and
user solutions [42]. In software startups, during the startup
[5] or concept phase [23] (see Figure 3), to fulfill the prod-
uct–market fit, various aspects of the product (user experience15
and its key features) and market (target customers and their un-
served needs) must be considered to develop the solution [37].
Bosch et al. [43] proposed an early-stage software startup de-
velopment model using the lean principle to help practition-
ers explore several product ideas simultaneously and determine20
which is worth implementing by validating the problem, solu-
tion, and MVP at a small/large scale. Furthermore, the value
proposition needs to be considered at the concept stage by an-
alyzing competitors’ products to identify similarities and key
differences in terms of providing value to the unserved needs of25
the target customers[37]. In a case study of software startups,
Seppanen et al. [41] discovered that founders’ competence and
software applications affect the idea validation practices.
Requirement gathering. Requirements for the product need to
be collected through different methods, such as interviews, fo-30
cus groups, questionnaires, direct observation, and analyses of
similar products [40], and can act as an input source for the
product’s list of features (see section 2.2 for RE). Some features
from the list can be used to develop a prototype and MVP [37].
The authors in [37, 40] highlighted that these collected require-35
ments need to be prioritized in terms of customer value and
incorporated during MVP-prototype development to provide a
good user experience to the customers. Similarly, the authors
in [24, 26] (see Figure 3) noted that requirements elicitation
makes it possible to create and validate a throwaway prototype40
to ensure that the evolutionary prototypes are selected for the
commercialization.
MVP. The prototype can be developed using scenarios. For
low fidelity prototype development, card-based prototypes from
use cases can be used, whereas for high fidelity prototype de-45
velopment, resources such as physical computing and software
development kits can be used [40]. The prototype developed
from the selected features can act as a candidate for an MVP.
The authors in [37, 14, 39] mentioned different types of MVPs
(e.g., Explainer video, Mockup MVP, Single feature MVP, Rip50
offMVP, Wireframes) that can be used to test the value propo-
sition by demonstrating it to the customers to collect their opin-
ions and validate the learning in terms of whether the features
actually address the customers’ needs. The knowledge accu-
mulated through testing should be incorporated into the value55
proposition to modify the prototype (MVP) for further testing.
After that, the prototype selected for commercialization must
be developed further using development methods and tools.
In the next section, we describe our theoretical framework
and sub-research questions (to address the main RQ) using the60
framework highlighted in Figure 1 and 3 to understand the ef-
fect of startup ecosystem elements on the MVP development
process.
3. Research design and execution
In this section, the theoretical framework and sub-research65
questions are described. Furthermore, the research process (see
Figure 5) is delineated to analyze the framework. In addition,
information on the data collection process and data analysis
techniques is provided. Finally, details of the analyzed data,
which will be used to answer the SQs, are given.70
3.1. Theoretical framework and research questions
We developed a framework in which seven components (Ct)
were created to explore the effects of the six elements (Ct2–7)
of a startup ecosystem on MVP development (Ct1) in software
startups. The explanations of the seven components (Ct) of the75
framework are discussed in Table 1. Some of the guidelines of
Sjøberg et al. [49] were considered when creating the frame-
work. For example, in [49], aspects such as constructs, propo-
sitions and their explanations, and the scope of a theory need
to be clearly presented to develop the theory in SE, while in80
our framework, for identifying and describing the main actors
to study the phenomena, we labeled them as components. Fur-
thermore, six causality-type sub-research questions (SQ) [12],
framed with their rationales, are provided (see Table 2) to better
account for the phenomena and the interrelationships between85
components. The designed framework, with its components
and sub-research questions, can be seen in Figure 4. To an-
swer the research questions, we conducted an empirical study
(discussed in the next section) involving direct observations and
interviews with relevant study units.90
3.2. Research methodology
The outcome of our research is to create knowledge, with the
objective of exploring the topic using a bottom-up rationale,
as information about the subject is limited and we want seek
in-depth information [50]. In addition, we use interpretivism95
as the research approach since our aim is to understand what
human beings have reflected on subjects such as the startup
ecosystem and MVP development; because these phenomena
involve human beings, it is important to evaluate human per-
ceptions on the subject [12]. To address our research objective100
and approach to maintain the research rationale and outcome,
we opted to use a qualitative research process to obtain qual-
itative data for answering the research questions. One benefit
of a qualitative research process is that it provides rich textual
information about a phenomenon through the study participants105
[50].
5
Table 1: Components of the framework
Components Description
MVP de-
velopment
(Ct1)
Combines a product idea and its requirements to create an MVP to test the business hypothesis with the customers and its
feasibility in the given target market [23, 41]. More information on MVP development is given in section 4.2.
Entrepreneurs
(Ct2) Entrepreneurs can be categorized as the opportunity (solution for a problem) or need-based (to seek employment for them-
selves) and are one of the entities in the startup ecosystem. To start a new venture in a given region, founders need to possess
an entrepreneurial mindset and characteristics (entrepreneurial alertness, prior knowledge, and entrepreneurial attitudes like
risk-taking) to establish their business in the highly competitive market [4, 32, 44]. These attributes could also enable them
to improvise their MVP by proposing radical solutions for unserved customer needs, thereby differentiating their products
from those of their competitors.
Technology
(Ct3) Technology is providing new and rapid ways to solve given practical challenges, and so most founders are focusing on
developing technology-based products. Thus, technology is influencing the features of the product, which can also effect
the MVP. [5, 45] For many early-stage software startups that lack financing, the use of available software technologies
(i.e., open source) and software development kits can provide a rich user experience and speed up MVP development in a
cost-efficient way, allowing the MVP to be demonstrated to customers quickly. Similarly, software technology, as a part of
the MVP, can assist in demonstrating the suitable performance level of the product.
Market
(Ct4) For seeking investment and scaling their business, it is crucial for the founders to understand and analyze the market to
determine its influence on their business and product development as well as their product’s influence on the market [4, 46].
Moreover, to create an MVP that matches product–market fit, the target market and its characteristics need to be analyzed
to identify potential unserved customer needs. Thus, the market can play a role during MVP development.
Supporting
factors
(Ct5)
Supporting organizations, such as incubators, accelerators, co-working space, mentors, and events, can act in a supporting
role to provide inexperienced founders with crucial knowledge for their business and product development. Moreover,
an inexperienced founder might find it challenging to identify a problem–solution fit for their product idea and thus have
difficulty creating the right MVP. Supporting organizations can help by providing the necessary information and resources
for suitable MVP development to help match the product-market fit.
Finance
(Ct6) The acquisition of financing through sources such as bootstrapping, seed or venture capitalist funding, bank loans or gov-
ernment financing programs is a critical part of the startup ecosystem, as it helps startups throughout their development
stages [4, 47]. Funding can also affect the MVP development process. For example, because the budgets and resources
of startups are limited, bootstrapping funding (that is, founders investing their own money) may encourage the careful
development of an MVP. In addition, MVPs need to be developed in such a way so as to attract further funding sources.
Human
capital
(Ct7)
Due to a lack of experience and the small number of people working on customer and product development in startups, it
is crucial for founding team members and hired employees to have different skill sets and talents to gain competitiveness
in the target market [4, 32, 48]. During the early stage of the startup, founding team members with the right talents and
multiple skills can affect MVP development by assisting in requirements collection through good interview skills as well as
in the selection of a suitable MVP to better understand customer needs.
Figure 4: Theoretical framework
6
Table 2: Sub-research questions to address main RQ
Sub-research questions Rationale
SQ1 How do the entrepreneurial characteristics
of founding team members influence MVP
development?
To explore whether entrepreneurs (through their alertness, prior knowledge, and risk-
taking ability) can influence MVP development in such a way that business and cus-
tomer value is achieved in an MVP.
SQ2 How does technology affect MVP develop-
ment? To determine the influence of emerging technologies (e.g., the use of open source soft-
ware) on MVP development in terms of finalizing the key specifications of a product,
such as its performance level, features, and user experience, and speeding up the MVP
development.
SQ3 What role does the market have in MVP de-
velopment? To examine the role of the market in the product features such that the MVP is viable
for customer demonstration. The type of market also affects the requirements, which
can either be those of the local market or the global market during the early stage of
product development.
SQ4 What supporting factors in the startup
ecosystem influence MVP development? To seek whether supporting organizations in startup ecosystem can influence MVP de-
velopment by helping transform an idea into an MVP by providing support and men-
torship (especially when the founding team members are young and do not have much
experience).
SQ5 How does funding affect MVP develop-
ment? To determine whether financing influences MVP development by forcing the team to
develop the MVP within specific time and cost constraints.
SQ6 Do talented members with the required
skills in a startup affect MVP development? To understand whether the talents and skills of founders and team members in startups
can influence MVP development.
Table 3: Sample of thematic coding data analysis
Raw data - We have been working for three years, and before that I had a couple other start-ups already.
- We incorporated early this year, so we are a very young startup. We started the process in January and got our business registration
in March, and we also started the actual operation in March, so it has been only about three or four months of active operations now.
Precode Study unit age
Focus area The contextual information of the study units and the interviewees
Raw data - I am the founder of the company, or one of the key founders, and I’m the CEO of the company. .. I’m involved in everything, so sales
and marketing and product development. We are a very small team, only four people, so we need to be involved in everything. And, of
course, managing the company and finance, and so forth, so everything.
- So my role in our company is to be kind of the main software developer for our product. We have two software developers in our
company, and we share the responsibility for creating the product.
Precode Interviewee role
Focus area The contextual information of the study unit and the interviewees
Raw data - I developed the product idea many years ago; I was thinking that you can do more with a smartphone. Basically, back then, we had
the mobile phone, and it had different types of interfaces.
- The idea developed because we’ve been trying to sell the IoT [Internet of Things] platform to many of Finland’s top companies, (–)
companies. Then, we realized that everybody wants it, wants something, but they don’t know what to do with it. So, then we came up
with an idea, then we understood that IoT is too broad a solution, so we have to narrow it down to a concrete product that people can
use immediately.
Precode Product idea
Focus area MVP development
7
Figure 5: Research process
As we were interested in studying a startup ecosystem with
the goal of understanding the influence of its elements on MVP
development, we selected a regional startup ecosystem to study
the phenomena. Previous studies, such as [4, 10, 22], have
stated that the startup ecosystem is a regional phenomenon;5
therefore, selecting a region to explore the startup ecosystem
phenomenon was suitable and appropriate for our purpose. We
selected the startup ecosystem in Oulu, Finland. This region
has a population of around two hundred thousand people and
is known as an information and communications technology10
(ICT) hub due to the presence of large software companies,
such as Nokia Corporation and F-secure Corporation, many
small and medium-sized enterprises (SMEs), and higher educa-
tion institutions, including the University of Oulu (UoO)5and
Oulu University of Applied Science (OUAS)6. These educa-15
tional institutes are aiming to develop a startup culture and en-
trepreneurship mindset among their students. Currently, Oulu
has an active evolving startup ecosystem and has established
several supporting organizations, with the goal to create hun-
dreds of new companies each year by nurturing new startups20
and established companies looking for global exposure. Sup-
porting organizations can be incubators789, accelerators10
5University of Oulu: https://www.oulu.fi/university/
innovations-and- entrepreneurship
6Oulu University of Applied Science:https://www.
oamk.fi/en/studies-and- applying/masters-degree/
education-entrepreneurship/
7Oamk labs: https:/oamklabs.fi
8Business kitchen- https://www.businesskitchen.fi/
9Kielo growth - https://kielo.com/kielo-in-english/
10Avanto - https://www.oulu.fi/forstudents/entrepreneurship/
avanto-accelerator
11, co-working spaces12 , or funding agencies (e.g., investment
firms 13 providing funding services for organizations a maxi-
mum of five years old and venture capital firms14 investing in25
early-stage startups). Currently, there are more than a hundred
startups in the Oulu region focusing on local/global markets
and creating products that are targeted to different business do-
mains. The availability of the technical talents and support of
the large companies in the given region assist in the creation of30
many software startups.
In our study, different units of the startup ecosystem, such as
accelerators, venture capitalists, co-working spaces, and soft-
ware startups, were explored and examined. The software
startup was selected as the study unit based on its character-35
istics, such as a lack of resources, a small team with limited
experience, innovation, and the presence of one product, as
mentioned in [1]. Table 4 shows the team size, interviewees’
experience, and types of products developed. The aspect we in-
vestigated in the study unit to answer the SQs in Table 2 was40
the role of different ecosystem elements in MVP development.
The study protocol included information on the study plan, field
technique, and interview questions to ensure that the empirical
study design and execution were systematic and rigorous.
11Neshtholma - https://nestholma.com/collaboration- programs/
oulu-startup- accelerator/
12Njetwork Inn - https://www.njetworking.com/en/
njetwork-inn- home-company/
13Business Finland https://www.businessfinland.fi/en/
for-finnish- customers/services/funding/startup/in-brief/
14Butterfly ventures - https://butterfly.vc/about-us/
8
3.3. Data collection procedure
To analyze the study units in the Oulu startup ecosystem, we
used a variety of data collection techniques, including observa-
tions, interviews, and documents [51]. The data were collected
incrementally in three iterations and were limited to the Oulu5
region. For example, data would only be collected in the third
iteration when the initial data from the second iteration were
analyzed. This was done to maintain a precise chain of evi-
dence and seek data saturation. Direct observations were made,
and documents were collected in instances where supporting10
organizations collaborated with software startups. For instance,
study unit U02 (see Table 4) organized startup events (i.e.,
pitching event and startup weekend) in which the first author
of this paper participated as an observer and made notes. Sim-
ilarly, study unit U18 conducted a three-month intensive work-15
shop for early-stage startups in which the first author partici-
pated and collected documents. The interviewees were selected
through convenience and snowball sampling (finding partici-
pating study units in the startup events and personal references)
[52]. They were chosen based on their experiences in startups20
and the roles that their organization played in the Oulu startup
ecosystem.
The interviews were semi-structured, and both open- and
closed-ended questions were used in the interview script, mak-
ing it possible for the researchers to collect information on both25
general and specific aspects of the phenomenon. The interview
questions covered three mains areas, which were as follows:
(1) the contextual information of the study units and the in-
terviewees, (2) the MVP development process (the interview
script questions were framed in such a way that the interviewee30
could reflect on aspects of the product idea, RE, and MVP),
and (3) the role of ecosystem elements in MVP development.
For example, for the third area, questions such as How does the
market influence your company and product development? and
How does the market affect your product idea and MVP devel-35
opment? were used to identify the role of the market in MVP
development and to seek answers to SQ3. The interview script
containing the questions for the three areas was refined and up-
dated during the three iterations, and the refined interview script
can be found online 15.40
A pilot study unit was selected for the interview to test the in-
terview scripts. During the interview sessions, notes were made
to examine the specific factors. In the first iteration, interviews
were conducted with five study units (two software startups and
three supporting organizations (U01–05)) in the startup ecosys-45
tem to gain an overview of the studied phenomenon in general
and the interviewees’ views on the roles of certain elements
in product and MVP development. In the second iteration, af-
ter gaining conceptual knowledge of the studied phenomenon,
the next three interviews were conducted with representatives50
from three software startups (U06–08) about MVP and product
development and the ecosystem’s role in it. In the third iter-
ation, the remaining 10 interviews were conducted with eight
representatives of software startups and two from supporting
15https://tinyurl.com/ycvh6t8q
organizations (U09–18), with the same objectives as during the55
second iteration. While analyzing the data obtained during the
third iteration, the authors came to the conclusion that no new
information was emerging. Thus data saturation had occurred,
and no further interviews were needed. The first author of the
paper conducted all the interviews, and he has several years’ ex-60
perience in conducting research interviews. One interview was
done through Skype, and the rest were performed face to face.
The shortest interview (I15) was around 20 minutes, while the
longest (I01) was 90 minutes. The rest of the interviews were
between 40 and 60 minutes, recorded in audio format, and later65
transcribed by a professional company. The interview tran-
scripts were sent to the interviewees so that they could check
the data; seven participants responded and approved the tran-
scription text.
3.4. Data analysis and interpretation procedure70
The interview transcripts and materials were imported into
the qualitative data analysis tool NVivo. We used a qualitative
analysis method to analyze the data to maintain a clear chain of
evidence [53]. Coding was done using a deductive approach to
examine and arrange the data in a systematic manner [54]. For75
this deductive approach, precodes were created to extract infor-
mation, such as contextual information on the study units and
the interviewees (six precodes), the MVP development process
(five precodes), and the role of ecosystem elements in MVP de-
velopment (six precodes). An example of this can be seen in80
Table 3, and a detailed description can be accessed online16.
The contextual information was later transferred to an Excel
sheet for statistical analysis in terms of frequency.
The effect of the elements (as shown in Figure 7) was ana-
lyzed based on the responses given by the interviewees. For85
example, when asking I14 about the effect of the market, he
responded It affects but not so much that you could imagine be-
cause we are using Google cloud... and thus considered it to be
in the somewhat effect category. Similarly, when I15 was asked
about effect of technology, he said it was very important in our90
start-up... We are doing the wearables and IoT (latest) things
so, the technology matters..., indicating that technology affected
the MVP development process. Moreover, no effect could be
seen in supporting factors for I01 because for his startup he did
not need assistance from supporting organizations during MVP95
development, as they developed it based on their own capabil-
ity. Finally, no answer was recorded when the interviewee did
not express any of his views in response to the question.
3.5. Analyzed data
In Table 4, we provide the background information on the100
interviewees and their relationship to the study units using the
data extracted through the six precodes (study unit’s age, do-
main, product, and size; and interviewee’s experience in star-
tups and job role in the study unit) for the contextual informa-
tion of the study units and the interviewees. The extracted data105
16Data analysis: https://tinyurl.com/y9gwk8jp
9
Figure 6: Statistical information of the study units and interviewees
in these six precodes are also discussed in section 4.1. An iden-
tity code was assigned to distinguish each study unit and in-
terviewee during the interpretation of the results, and thus, to
maintain the chain of evidence. Similarly, five precodes (prod-
uct idea, elicitation method, requirements documentation, pri-5
oritization of requirements, MVP) containing information re-
garding the MVP development and the results obtained are de-
scribed in section 4.2. The results of the data analysis of the
effects of the ecosystem elements on MVP development using
six precodes (entrepreneurs, technology, market, support fac-10
tors, finance, and human capital) are discussed separately in
section 4.3.
4. Results
4.1. Description of study units and interviewees
Study unit description. The units we studied in the Oulu startup15
ecosystem were 13 software startups and five supporting orga-
nizations. Information regarding the study units can be found
in Table 4 and Figure 6. Out of 13 software startups, 11 had
less than five employees, while the other two had 5–20 em-
ployees. Each software startup is characterized into one of20
two categories: university spin-off(USo) or solo entrepreneurs
(SoE). USos are startups that originated from academic re-
search, whereas SoE startups are independently created by en-
trepreneurs. Furthermore, most of the software startups were
less than three years old. This signifies that the software star-25
tups were usually in the early phases, where they were aiming
to stabilize their business and product development. In addi-
tion, six software startups were focusing on creating products
to be used either on desktops (or laptops) or mobiles, while the
other five were aiming their products to Web use.30
Apart from the software startups,two study units were accel-
erators, and their primary objective was to provide support and
mentorship to early-stage software startups and students at the
university level. The other two study units were an incubator
and co-working space. The incubator was creating an envi-35
ronment for the startups in their preconception stage, aiming
to transform the mindset of the people living in the region to-
wards entrepreneurship. The objective was to create a channel
where people could meet and discuss the idea and to help them
to develop and provide business contacts through which they40
could further develop their idea with the help of two accelerator
organizations. The co-working space organization was provid-
ing affordable prices for early-stage founding team members in
terms of technical infrastructure and workspaces in which they
could establish their startups and develop their companies with45
a focus on customer and product development. Finally, the in-
vestment firm was investing funds in early-stage startups with
the potential to scale and good founding team members.
Interviewee description. In the software startups, most of the
interviewees were founders and worked in the role of chief ex-50
ecutive officer (CEO), chief technical officer (CTO), software
developer, or product owner. Furthermore, these interviewees
had more than a year of experience with the startups. Con-
cerning the supporting organizations, most of the interviewees
had key roles in their organizations and were acting as mentors,55
event managers, investors, and business developers. Thus, they
were working closely with startups in the region.
Based on the characteristics of the Oulu startup ecosystem,
study units, and experience of the interviewees in startups
within the study units, we can say that the empirical data gath-60
ered from the studied phenomena are suitable for answering
the research questions (Table 2) to analyze the effect of startup
ecosystem elements on MVP development.
4.2. The MVP development procedure
We discuss MVP development in three stages, which were65
observed in the studied software startups.
Product Idea. In the context of software startups, a product
idea typically originates from founders and is influenced by the
founders and team members based on their previous and cur-
rent involvement in the work environment. For example, if the70
10
Table 4: Study units and interviewee details
Unit
ID
(U)
Unit description Employee
size
Business domain Product
type
Age
(years)
Interviewee
ID (I)
Startup
expe-
rience
(years)
Interviewee role
U01 Software startup (SoE) 1-5 Marine Desktop 8 I01 7 Founder/SW developer
U02 Accelerator 1-10 - - - I02 2 Business developer/Mentor
U03 Software startup (USo) 1-4 Healthcare Mobile 1 I03a 1 Founder/CEO
I03b 1 Founder/CTO
U04 Co-working space 1-5 - - 5 I04 5 Event manager
U05 Venture capitalist 1-5 - - 6 I05 6 Investor/partner
U06 Software startup (SoE) 1-5 Software Desktop 4 I06 4 Founder/CEO
U07 Software startup (SoE) 1-5 Software Web+Mobile 3 I07 3 Founder/CEO
U08 Software startup (SoE) 1-5 Games Mobile 3 I08 3 CEO
U09 Software startup (SoE) 1-5 Ecommerce Web+Mobile 3 I09 6 Founder/SW developer
U10 Software startup (SoE) 1-20 Software Web+Desktop 3 I10 3 Founder/Product owner
U11 Software startup (USo) 1-5 Education Mobile 1 I11 1 Founder/CEO
U12 Software startup (USo) 1-5 Software Mobile 2 I12 7 Founder/SW developer
U13 Incubator 1-5 - - 7 I13 7 Mentor
U14 Software startup (SoE) 1-5 Location services Mobile 2 I14 2 Founder/CEO
U15 Software startup (SoE) 1-10 Software Desktop 6 I15 6 Founder/CEO
U16 Software startup (SoE) 1-5 Cybersecurity Web+Desktop 1 I16 10 Founder/CEO
U17 Software startup (USo) 1-5 Games Web+Desktop 2 I17 2 Founder/SW developer
U18 Accelerator 1-10 - - 2 I18 5 Business developer/Mentor
founder has experience and competence, the product idea con-
text will be unique, and it has the potential to address the prod-
uct–market fit. In software startups (U09 and U10), the product
idea originated from the founders based on their competence
and experiences in their previous companies’ context and work,5
and they were quick to recognize the product–market fit. Simi-
larly, the product idea in spinoffstartups, such as U03, U11–12,
and U17, was developed by Ph.D. and master’s students based
on their theses and university contexts.
Requirements gathering for MVP development. In our study,10
the sources for the requirements varied among the software star-
tups study units. For example, internal sources were used in
U01, U09–10, and U15, in which the founders’ and team mem-
bers’ competency was the source of the requirements. Simi-
larly, in U02, U12, and U17, the founders’ postgraduate theses15
served as the source for the requirements. In terms of the elic-
itation method, a brainstorming session was used in U09–10
and U16; the members of the startup, including management,
provided a high level of requirements, which the technical team
used to create a new level of features needed for the prototype20
development, and they discussed these in a brainstorming ses-
sion. Customer interviews/surveys (U11–12, U15, and U17)
and prototyping (U10) were the other elicitation methods used.
In some software startups, documentation was done using a
text document as an informal note. For example, in U09–12 and25
U16, the requirements were obtained from the text document.
They were then refined and added to an Excel sheet, Wiki page,
Microsoft Word document, or Google Drive document. In a
few of these units, different feature layers were also created to
organize the requirements (U09). The members could add their30
requirements to improve the product further (U10), and there
was also a possibility of tracing who added what (U12, U16).
In U17, the requirements were documented in a bachelor’s
thesis. In the document, prioritization was carried out based
on the value for the customer/product/company/shareholders35
(U09–12, U15–17). The cost and effort required for implemen-
tation were given priority, for example, in U11. In U10, a mar-
keting team prioritized the requirements given by customers as
well as the delivery time. In U14, the founder served as the
product manager and could prioritize the requirements in dif-40
ferent categories based on the requirements for the prototype,
first pilot version, or first release.
MVP. In the analyzed study units, the MVP was created to val-
idate the customer and user needs (U09, U16–17), examine the
feasibility of further development based on the availability of45
cost and time (U17), and expand the product scope from the
local to global market (U16). In U11, a prototype was created
based on prioritized requirements. In U12, the features of the
MVP were reduced three times based on the customer feedback
and market requirements. A similar result was observed in U10,50
which trimmed its broad solution by creating an MVP to vali-
date it with the customers.
4.3. Ecosystem elements’ effect on MVP development
In this section, we discuss the answers to each of the SQs
mentioned in Table 2. Furthermore, Figure 7 provides a matrix55
displaying information on the elements’ effects on MVP devel-
opment, as identified during data analysis. Similarly, Figure 8
shows the effects of the elements in terms of frequency.
4.3.1. Entrepreneur
The third set of data analyses examined the effects of en-60
trepreneurs on MVP development. Figure 7 presents the break-
down of entrepreneurs’ effects according to the interviewees.
For example, interviewees (I04, I10, I12–16) expressed that it
had a clear effect while others (I01, I09, I11, I17–18) thought
that it had some effect on the MVP development. A possible ex-65
planation for these differences may be the interviewees’ role in
the studied units. For example, I10, I12, and I14–16 were acting
11
Figure 7: Matrix displaying the levels of elements’ effects on MVP development, as identified in interviews with study unit participants
Figure 8: Elements’ effect (in frequency) on MVP development
as the founders and CEOs, and therefore they were leading their
software startups. This required entrepreneurial characteristics,
such as alertness and prior risk-taking, which were reflected in
their views on the subject. In contrast, I01, I09, and I17 were
also founders, but they were mainly acting as software develop-5
ers. Therefore, their main focus was on software development,
and they may have lacked entrepreneurial characteristics, which
may have resulted in different viewpoints.
Entrepreneurs with no or little competence encounter chal-
lenges in determining what types of product ideas and related10
requirements are valuable to create their MVP for achieving a
product–market fit, especially when acting as internal sources,
and later, when prioritizing the requirements for the MVP.
These entrepreneurs are often new graduates who have just
established their first startup and are exemplified in U3, U12,15
and U17. The primary challenge they face is developing
requirements for MVPs that give value to their business (U12,
U17) and include the customer perspective (U3). Similarly, a
highly competent entrepreneur knows which product ideas and
MVPs would be appropriate to validate with the customers to20
address a given problem and provide customer value. This type
of scenario was observed in U9–10 and U14–16, in which the
MVP development was more rigorous than that in the spin-off
startups started from university (U3, U11-12, and U17).
Another example was seen in U1, where the founder launched25
several startups before U1, and this helped create the require-
ments that made the product idea and its prototype valuable
to the customer. Respondents (I10, I11, and I13) mentioned
that risk-taking is a critical aspect of entrepreneurship, and
it influences MVP development by creating bold, innovative30
features. It is essential that the founders of a startup should
have an entrepreneur skill set, such as practical experience and
an innovative mindset. As interviewee I16 put it,
Part of the entrepreneurship mindset is that you are not35
afraid of trying new things, and I think it is also reflected in
our product in the sense that you may be taking leaps with the
product that you wouldn’t do in an enterprise or the enterprise
wouldn’t sign offon radical product ideas that easily. But in a
startup, you can also experiment with the product ideas much40
more freely. - I16
12
Conclusion. The first SQ in Table 2 sought to determine the in-
fluence of the entrepreneurial characteristics of founding team
members on MVP development. Overall, the above results in-
dicate that founding team members’ competence in terms of
entrepreneurial characteristics had a significant effect on MVP.5
Moreover, previous experiences in startup creation can improve
the entrepreneurial characteristics of founders, which could
positively affect the MVP.
Furthermore, most of the software startups were opportunity
based (e.g., U03, U16, U17), with the founder seeing an oppor-10
tunity to address a problem. However, it was also observed that
some software startups were need based, where the founders
were looking for employment (U01, U10, U12, U15) and thus
motivated to develop the ideal MVP and product to establish
their startups, which could be a reason that they were remained15
in operation for at least three years.
Related literature. Seppänen et al. [41] stated that en-
trepreneurs’ influence is based on their level of competence
(no/little competence or high competence) when acting as
founders during the product idea validation. Thorpe et al. [39]20
indicated that entrepreneurs operating as founders could use
an MVP as a tool to communicate with investors and soft-
ware developers for sharing the knowledge to transform MVPs
into full-fledged products; this was observed in U06–07 and
U16. Furthermore, the authors in [44] also pointed out that en-25
trepreneurial alertness, prior knowledge, and entrepreneurial at-
titudes (including risk-taking) are some traits of an entrepreneur
that are needed to identify opportunities for the product idea in
the market.
4.3.2. Technology30
Most interviewees responding (see Figure 7) to this item felt
that technology has a significant effect on MVP development.
One possible explanation could be that because software
startups aim at developing software-intensive products, the role
of the latest technology becomes essential during MVP and35
product development to maintain competitiveness in the market
(I07). Furthermore, advancements in technology and incorpo-
rating technological solutions for the given problem can affect
an MVP by making the solutions viable for the longer term and
helping to avoid technical debt from the beginning (I16, I17).40
For example, in U01, U06–08, U14, and U16, the products
were focused on the Web, desktop, and mobile platforms,
and they needed to infuse technology into the requirements
to make the MVPs feasible for the desired technology and
scalability. The selection of the right technology can speed up45
MVP development and market launch. As interviewee I10 put
it,
Choosing the right technology helps you to get your minimal
viable product offthe ground fast. Choosing a fancy technology50
may not help you to bootstrap your idea fast. - I10
The selection of the technology also depends on the previous
work experience of the founding team members in large compa-
nies (U01, U07–10, U14–16). For example, I07 mentioned that,55
before starting the startup, they worked in a large company, and
somehow, the technology used in the previous work influenced
the selection of the current technology. Similarly, I08 pointed
out that large software companies in the region provide nec-
essary technical talent through employment, and this talent is60
affected by the technology in use by large software companies,
which in turn, affects the selection of the technology during the
prototype design.
The role of technology can be assessed during the identifica-
tion of requirements through the analysis of similar and rival65
products. Furthermore, I12 pointed out that investors prefer
technology-based startups, so technology needs to be consid-
ered during MVP development to attract potential investors
in the future. The use of open source technology also played
a role in the MVP development in software startups (e.g., 1070
and U17) in speeding up the development. As interviewee I17
stated,
Big companies like Google and Facebook, they are releasing
their, for example, technology or software frameworks free, so75
that you don’t have to build everything from scratch. They are
quite powerful tools that enable us to do things that were not
possible even two years ago. ...Now I’m using those tools. And
they are helping me a lot, so that, in that sense, I think this
technological progress has been quite important for us. -I1780
Conclusion. The second research question in Table 2 aimed to
assess the technology effect on MVP development. The results
discussed above indicate that technology advancement can en-
hance the user experience of an MVP. Similarly, the selection of85
the right technologies by founders can increase the innovative-
ness of the MVP, and its quick launch and use of open source
software can also assist in speeding up of the prototype devel-
opment. Previous experience in large software companies can
also influence the selection of suitable technology, which can90
affect the prototype design.
Related literature. Crowne [5] also stressed that startups need
to use emerging technologies to make innovative products, and
they affect MVP development in terms of the essential specifi-
cations of the product, such as its performance levels and fea-95
tures [45, 55]. Furthermore, with the selection of the latest de-
velopment technology tools that are recognized and supported
by the software community, software startups can incorporate
new features and improve the speed of their first release to mar-
ket [7, 16]. Advanced innovative technological products that100
are new to the market can lead the team members to pursue the
creation of requirements that focus more on technology than on
customer and user needs [7, 56]. As finance and human capital
resources are limited in startups, the authors in [39, 57] empha-
size that the use of open source technology can speed up the105
prototyping design because it is freely available to everyone.
This was also observed in our software startups’ study units.
4.3.3. Market
For software startups, it is essential to analyze the market
and paying customers and to evaluate their MVP with new cus-110
13
tomers and promote the first version of the product in the mar-
ket (I01, I17). However, from Figure 7, we can observe that
only a few interviewees (I11, I12, I17, and I18) expressed that
the market influences the development; three represented early-
stage software startups, while the rest were acting as supporting5
organizations. The others revealed that the market affects MVP
development in some way. One possible explanation could be
that due to the limited market size of the region, many software
startups collect the requirements from and test their MVPs tar-
gets with easy-to-reach local customers and users and avoid an-10
alyzing the market beforehand. Another possible reason could
be related to the early stages of the startups and their lack of
knowledge regarding how to examine the market fit for the
product idea.
In the analyses, some respondents mentioned that the mar-15
ket and customers influence MVP requirements, such U12 and
U16–18. In U01 and U07, customers affected the requirements
and acted as requirement sources. In addition, after having
these discussions with the customers, it is crucial to refine the
collected ideas and seek patterns. This makes it possible to rec-20
ognize patterns and essential features for the broadest possible
variety of target customers and market (I16). Similarly, in U08
and U09, the sources of the requirements for the prototype were
similar products in the market. To find the market fit, discus-
sion with and gathering feedback from the customer can pro-25
vide some direction, which may affect the creation of a viable
MVP (I08, I16). I10 mentioned that, in his organization, the
founders had previous experience in a large company and used
the same types of techniques to analyze the market and identify
potential customers’ underserved needs and integrate the infor-30
mation obtained in the requirements for prototype development.
Conclusion. Overall, with regard to the third SQ, we did not
find any strong indication that the market affects MVP develop-
ment. One possible explanation could be the limited market size
of the region. Consequently, during MVP development, several35
software startups were focused on collecting the perspectives of
reachable potential customers in the region for validation of the
ideas.
Related literature. In the literature [11, 33], it has been noted
that many software startups are market driven, where the cus-40
tomers and users are unknown, and thus requirements are iden-
tified and elicited by the founders’ assumptions, market anal-
yses, and product value. Klotins et al. [7] highlighted that the
market also stresses the startup’s need to create an attractive first
version of a product to satisfy the customer and maintain com-45
petitiveness in the market. Studies [58, 59] have also pointed
out that markets can act as significant sources of requirements
for startups; customers from sensitive market sectors (e.g., de-
fense and finance) expect the use of standardized processes dur-
ing the development process, and thus the type of target market50
also influence the requirements.
4.3.4. Supporting factors
Interviewees like I02-04, I11-13, and I16-18, who belonged
to either early-stage software startups or supporting organiza-
tions, indicated that supporting organizations had affected their55
MVP development. During the early stages of startups, if the
founders are recent graduates, they may lack practical expe-
rience and thus need support from incubators, accelerators,
and mentors to improve their product ideas, prototypes, and
business-related activities. Interviewees I03, I06, and I07 men-60
tioned that even if a product idea was not scalable at the initial
stage, coaches and mentors helped the founders by providing
business, technical, and customer discovery support for their
product ideas.
For early-stage software startups like U03, U11, and U17,65
supporting organizations, such as incubators and accelerators
(U02 and U13), provided them with confidence and necessary
knowledge regarding the business and prototype development
to help further develop their product idea and build the MVP
on it. For one software startup (U10), the accelerator (U18)70
also provided potential contacts that could help develop the
prototype, as it was not possible for the startup to do everything
independently (I10). Accelerators and incubators also offered
workshops to young founders that helped them shape and
validate their MVPs by pointing out potential customers and75
other sources of requirements (U17–18). As interviewee I02
from accelerator U02 described it,
In our program, we urge them to build a totally simple
prototype, just to explain the basic functions of the product. We80
encourage them to develop a prototype right now; afterwards,
the only thing we’re doing is linking them with the players so
that they could actually push it further if they want to. -I02
An example of this scenario was seen in U11, which ob-85
tained support from accelerators (U02 and U18). In addition,
U14 received mentorship from incubator U13 during product
idea development. Similarly, software startups such as U03 and
u17 received support from incubators and help in accelerating
their development process from the accelerators’ intensive pro-90
grams. I12 mentioned that one incubator in the region provided
a co-working space to U12 and other startups, where they could
discuss product ideas with one another for information sharing
and further shaping the process of MVP development. Further-
more, during the pitching of ideas in a startup event, the judges95
of the competition provided feedback on the product idea of
U12, which resulted in an improved MVP.
However, one interesting observation was that the founders
with experience and competence usually avoided supporting or-
ganizations, such as incubators and accelerators; however, they100
did consider assistance from funding agencies to secure invest-
ments for the software startups. This was observed in study
units such as U01 and U06–10.
Conclusion. Our overall conclusion (to answer the fourth SQ)
is that supporting factors, such as incubators, accelerations, co-105
working spaces, events, and mentors in the startup ecosystem,
can affect MVP development in most software startups in which
the founders are young and inexperienced in terms of busi-
ness and product development. Incubators provide long-term
programs for building an entrepreneurship mindset among the110
individuals in the region. This may affect the product ideas
14
on which startups can be formed. Accelerators provide-short
term intensive programs that can accelerate the product idea
and prototype development process among the program partici-
pants. By participating in co-working spaces, founders can have
discussions with other founders about their ideas and proto-5
types and receive feedback that could result in improved MVPs.
Mentors can provide valuable guidance during the programs to
improve the prototype development and identification of poten-
tial customers to validate the MVPs. During the pitching event,
feedback can be received from experts and judges to improve10
the product ideas in terms of value to customers and the mar-
ket.
Related literature. Articles such as [4, 60, 61] emphasized that
support organizations could be incubators, accelerators, co-
working spaces, and events that support early-stage startups15
lacking expertise and experience in business and product de-
velopment.
4.3.5. Finance
Several interviewees (I06-08, I12, I15-17) expressed that
finance played a role during MVP development. One possible20
explanation could be that, initially, funding in the form of
bootstrapping can provide startup companies with a basic
level of salary, and the founders can start working as full-time
employees and focus on developing a prototype and first
version of the product quickly. As I02 and I16 put it,25
When you have the idea and you wanna do something with
the idea, you at least need some funding or some financial,
things that mean you can actually develop a prototype, develop
your first draft of a product or service or software, which you30
basically need for the time you invest or to buy the additional
skills if you don’t have them yourself. Funding is important.
-I02
I think if you want to quickly develop a first version of the35
product that you can market test with, then you’ll need funding
so that your team can focus on one thing entirely and get the
first version out quickly. - I16
I12 and I15 stated that, in their software startups (U12 and40
U15), it was necessary to develop an MVP within a strict
period because of the limited amount of seed funding they
received. This may provide constructive pressure on the
team members to create the product idea and its requirements
to efficiently generate the MVP. As interviewee I13 described it,45
I would like to see that none of the startups get too much
money, in the first phase, but there would be, 5,000, 10,000
max, euros available to provide the minimum viable product, to
provide the first initial prototype of that product. And then they50
go to the customer and select and collect the feedback on how
this applies to your problems. -I13
A venture capitalist firm (U05) invested in U06 and U07 with
capital funding to expand their prototypes into products through55
research and development. Funding can also help provide the
resources to improve the validation of the product requirements.
I16 mentioned that investors influenced requirements by acting
as the requirement source; they invested in U16 through seed
funding in the concept stage of product development.60
Conclusion. An optimum level of funding can provide positive
stress for the founding team members to build the MVP effi-
ciently and within the allotted time. Seed funding in the form
of bootstrapping can motivate founders to develop idea proto-
types to make a positive impression on the customers. Venture65
capital firms and investors can invest in startups that have MVPs
with rich user experiences and the potential to scale, which may
force startups to design prototypes in such a way to attract in-
vestment attention. Investors who have invested in startups can
also provide their perspectives on improving the prototype to70
increase their return on investment.
Related literature. Startups need different kinds of funding
(i.e., seed funding at the concept stage and venture capital fund-
ing at the mature stage) during the various phases of product
development. Seed funding can affect MVP development sig-75
nificantly, especially during the early stages of startups [4, 47].
Furthermore, studies [7, 62, 63] have shown that finance-related
aspects, such as crowd-funding success and crowd-funding
websites, can serve as the indirect requirement sources for the
product idea and MVP validation.80
4.3.6. Human capital
Other than technology, human capital turned out to be the
most important aspect (Figure7) affecting MVP development.
If founders and team members have the required capabilities
for creating product requirements and prototypes, there is a85
good chance that their MVP will address customer and user
needs and provide a good user experience when it is launched
for demonstration. Furthermore, people with different types of
skills can help to develop the prototype efficiently [I07]. For
example, in the case of U01, the founder and members had90
the relevant human capital and talent (because of their long
experience in working for large companies and creating a few
startups previously) to develop the product requirements and
act as requirement sources. Respondent I07 mentioned that an
excellent technical team is essential for product development.95
I10 stated that, in U10, each member (either on the technical
or marketing team) had responsibilities for developing the
requirements for the prototypes, and thus all the members were
useful by serving as internal sources for the requirements.
Overall, many software startup units emphasized that human100
capital and talent played a significant role in their MVP
development. As interviewees I14 and I16 mentioned,
I think it’s really important that people.. have different kind
of skills and different kind of mindset. It’s not good if all the105
people are the same, all have a technical background, and so
on. It’s better that you have mixed background from school and
life in general, that you get different kinds of examples. -I14
15
We had people who knew how to run a startup business, how
to run a security business, and how to run an international
business, so it’s really the experience and knowledge of the5
people that was the key driver in how we shaped up our both
product and business plan. - I16
Conclusion. Human capital is the second most crucial aspect
in a startup ecosystem that can affect the MVP, and multi-10
talented team members can provide necessary business and
technical knowledge during the development related to the
product–market fit. Talented members can assist in MVP devel-
opment by gathering requirements through effective customer
interviews and surveys and systematically analyzing qualitative15
and quantitative data to offer meaningful input during the de-
velopment. Further, hiring individuals with previous compa-
nies could affect the MVPs and prototypes, especially during
the design stage. Finally, having a team with different back-
grounds (e.g., business and technical experience) can enrich the20
prototype features in various ways.
Related literature. In the literature [41, 32, 58], it has been
stated that the competence of founders and team members de-
termines requirement priorities and idea validation practices,
and it sets the direction of the startups and their product de-25
velopment. Importantly, the authors in [7, 11, 63] argued that
capturing the requirements from the customer requires good in-
terview skills to identify the real customer needs, and thus tal-
ented individuals with such skills can affect MVP development.
5. Discussion30
In this section, we discuss the implications of the results of
our study along with the validity of the research.
5.1. Answer to the main RQ
In our study, we learned how six different elements in a
startup ecosystem affect MVP development (see Table 5) in35
software startups. From the analyses, it was found that in most
software startups, the product idea commonly originates from
the founder. Most elements in the startup ecosystem, such as the
entrepreneur, support factors, and human capital, can initially
affect the product idea by providing mentorship to enhance the40
founders’ and team members’ entrepreneurial skills and talents
(business and technical aspects), who can then, in turn, generate
rich user-experience MVPs (prototypes). Similarly, the market
can influence customer interviews (through customer discov-
ery) and market research to elicit the requirements and facili-45
tate the development of MVPs. Finance can play a role here, as
startups need to consider the implementation costs during MVP
development. Furthermore, entrepreneurs can estimate the real
value of the requirements in terms of enhancing the business
value of the product features.50
Table 5: Elements’ effects on MVP development
MVP development
Entrepreneur Entrepreneurs’ attributes, such as entrepreneurial
attentiveness, competence, and risk-taking abil-
ity, affect MVP development by making a prod-
uct more business and customer oriented.
Technology Emerging technology and the use of open source
software affects MVP development, as it ensures
a satisfactory performance level and contempo-
rary features with improved MVP development
time.
Market The type of target market (local/global) and/or
the type of market sector (sensitive/not sensitive)
can influence MVP development, as the proto-
type may be shaped according to its market fit.
A local market with a limited size may prompt
the founding team members to consider local cus-
tomers’ and users’ perspectives during the devel-
opment and validation of their MVP. Later, the
modified MVP can be shaped to fit the global
market.
Supporting
factors
Supporting factors, such as incubators and accel-
erators, can help inexperienced founders advance
their MVP development through their programs.
Receiving assistance from mentors and participa-
tion in startup events can provide valuable guid-
ance and feedback on MVPs and their develop-
ment.
Finance Founding team members with enough funding
can work full-time to conduct MVP development
efficiently, allowing them to launch the product
at the right time in the market. Furthermore, an
appealing MVP needs to be designed and devel-
oped to attract investors’ attention for further in-
vestment.
Human capi-
tal
Talented members with the necessary skills and
diverse backgrounds can provide quality require-
ments, assist in better design and development of
MVPs, and, later, test MVPs accurately with cus-
tomers.
16
5.2. Results implications
A product idea is an important piece of information during
the product development stage, and it is essential for achieving
product success. To understand MVP development and the RE
process, startup founders and team members need to analyze5
the product idea. In this process, the business and technical
aspects of the product idea should be considered along with the
influence of startup ecosystems on the idea.
Implications for practice. The data found and analyzed in this
study were from actual cases of software startups and support-10
ing organizations in the startup ecosystem. Practitioners can
use our results in the following ways:
•Experienced/inexperienced founders and team members
can gain the understanding that ecosystem elements may
directly or indirectly affect their MVP development;15
•Our study presents the way in which requirements are cre-
ated from the product idea and how they are influenced
by different elements of a startup ecosystem. This will
give insights to practitioners when they start looking for a
product idea, and later, when they create an MVP for it;20
and
•Our study has discussed the role of the entrepreneur, mar-
ket, and technology in the creation of the product idea and
the requirement development process. Therefore, startup
team members can be guided in acquiring entrepreneurial25
skills so that they can develop scalable product ideas. Sim-
ilarly, inexperienced founders can understand the role of
supporting factors in helping them with product ideas.
Implications for research. We conducted an empirical study in
which units were analyzed to understand the role of startup30
ecosystem elements in MVP development. Our findings have
the following implications for researchers:
•Researchers should perform an in-depth evaluation of the
propositions discussed in Table 5 with explanatory and de-
scriptive objectives using research methods, such as ex-35
periments and surveys, to determine the cause-and-effect
relationships between variables in the hypothesis;
•Human capital and supporting factors play a role by pro-
viding required business and technical skills to the process,
and this is evident in the difference between experienced40
and novice team members in startups. Researchers can ex-
plore how inexperienced members could obtain the neces-
sary skills and education to make MVP development more
effective; and
•The results imply the need to closely examine whether45
product idea validation is the same as requirements vali-
dation in software startups. In some situations, they ap-
pear similar, but researchers need to thoroughly examine
various scenarios to bring greater clarity to this topic.
5.3. Validity discussion50
In this section, we discuss the validity of our study based on
the criteria put forward in [53, 64].
Construct validity. This deals with whether the constructs cre-
ated in a study reflect the research objectives and RQs. In our
study, the components were developed based on the existing55
literature (see section 3.1). Similarly, interview questions were
created in such a way as to obtain answers to the SQs. It is
also important to validate whether the theoretical framework
and SQs we developed were properly reflected during the data
collection. In our study, observations and interviews were con-60
ducted to collect data and obtain multiple sources of evidence
for the SQs. In addition, there may be a threat related to the
interviewees’ subjective opinions. To address this issue, we
ensured that, during the analyses, multiple subjects were con-
sidered and that our findings were based on these. We also65
used semi-structured interviews to ensure that we could ask in-
depth questions. There was also the possibility that the inter-
viewees were unfamiliar with the role of ecosystem elements
in MVP development in their context. To address this concern,
we ensured that, before discussing this topic, we first asked the70
interviewees about their opinions regarding their product de-
velopment, how MVP development processes were performed
in their context, and their opinions on the elements of startup
ecosystems and the role of these elements in their company.
Only then did we ask them about their ideas regarding the rela-75
tionship between ecosystem elements and MVP development.
Internal validity. This deals with whether the causal relation-
ship that exists between two variables is not affected by an ex-
ternal variable. However, a causal relationship is often the focus
in an explanatory study. In our study, internal validity depended80
on how the SQs were evaluated based on the evidence found.
Two issues may affect this process, which are interviewee bias
about the study topic and incorrect answers about their actual
work process in the study units. To address this bias, we made
sure that the interviews were recorded and transcribed by a pro-85
fessional company and then sent back to the interviewees for
confirmation. Regarding incorrect answers on their work pro-
cess in the different study units, most of the interview partici-
pants were eager to participate in the research to gain the knowl-
edge from the research outcome. For the other study units, at90
the start of the interviews, we mentioned that the participant’s
name and company identity would remain anonymous.
External validity. This deals with whether the results of a study
are applicable and generalizable to contexts outside the stud-
ied case. We acknowledge that the answers to the SQs in the95
present study are limited to a specific region, based on one inter-
view in each unit, and thus may not apply to startup ecosystems
in general, which is a threat. Nevertheless, the Oulu startup
ecosystem is well known as an ICT hub. Indeed, it is famous
for its software and startup companies, comprising talented in-100
dividuals in the field of technology. A detailed description of
this ecosystem is also provided in section 3.2, which highlights
17
its key stakeholders. Furthermore, most interviewees had con-
siderable experience related to startups and had a key work
position in the study units (see Figure 6 for experience and
role). Most of the interviewees who belonged to software star-
tups had product development experience. The software star-5
tups that we examined also belonged to different product and
business domains, and they were selected based on characteris-
tics mentioned in [1] (see section 3.2). Therefore, other startup
ecosystems and software startups, whether they are more or less
skilled in the technology sector, could benefit from the results10
of our study.
Reliability. This is achieved if other researchers conducting the
same study would come to a similar conclusion as that obtained
in the present one. To address the issue of validity, we en-
sured that we developed a case study protocol. The interview15
questions were also pilot tested, and the interview data were
transcribed by a professional company so that the data could
be interpreted in a rigorous way. The design of the theoreti-
cal framework and SQs was based on previous literature on the
topic, and other researchers can use the same sources as ref-20
erences. A case study database was also created, in which in-
formation related to the data collection, such as the interviews
and data analysis files, was stored and secured properly. Like-
wise, we shared the interview script (presented as supplemen-
tary material). Moreover, the interview questions and data anal-25
ysis samples are shown in a distinct and clear way so that other
researchers can verify the findings and apply the same methods
to arrive at the same conclusion as in our study.
6. Conclusion
This study sought to determine how MVP development in30
software startups is influenced by the elements of a startup
ecosystem. Product development is crucial for startups, and
thus the role of MVPs is essential for product success. In our
study, a theoretical framework of this phenomenon was created,
and SQs were developed to explore it. Empirical research was35
performed to answer the SQs, which included interviews with
practitioners (in software startups, accelerators, incubators, in-
vestors, etc.) to determine their perspectives and obtain their
insights on the phenomenon. The study contributes to the liter-
ature in following ways:40
•We explained the MVP development (see section 4.2) in
the studied software startups in terms of the product idea
and the requirements gathering to develop the MVP; and
•Our study explored and determined the effects of startup
ecosystem elements on MVP development (see sec-45
tion 4.3).
Our study also opens new directions for future research.
First, the theoretical framework we created needs to be eval-
uated in the startup ecosystems of other regions. Second, ex-
periments and surveys can be conducted to examine the phe-50
nomenon further.
Acknowledgement
The authors would like to sincerely thank the follow-
ing startups (Tecinspire: https://www.tecinspire.com/
en/, Sensorfleet: https://sensorfleet.com/, Iprotoxi:55
https://www.iprotoxi.fi/, AISpotter: https://www.
aispotter.com/) and other anonymous organizations for
their participation in the study. Many thanks to the mem-
bers of Software Startups Global Research Network (https:
//softwarestartups.org/) for their support. Finally, we60
would like to thank the reviewers for their time and high-quality
feedback to improve the research article.
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