Business Model Development and Validation in Digital Entrepreneurship

AbstractEvery venture is developed under high uncertainty and causal ambiguity. A large majority of digital startups leverage the lean startup approach to validate the attractiveness of their venture, to reduce avoidable investments of scarce resources, and to structure the venturing process. Digital entrepreneurs highlight that prioritization and the definition of MVPs are two challenges that entrepreneurs face when applying the lean startup approach. We provide support on these particular challenges through a structured approach—the venture pyramid—to (in)validate digital business models in the face of high uncertainty. Furthermore, we map different types of digital business models with patterns of minimum viable products to inspire digital entrepreneurs and scientists alike. To illustrate our thoughts, we have developed two case studies of German startups that applied a process of rigorous iteration and learning to their venturing processes.