It convinced VCs of absolutely nothing. So I just went ahead and served those customers with a backup plan that the web services behind it could be run by the customers themselves if I folded.
To be honest, it didn't exactly work but I'm still going.
The product costing $200 isn't enough information to give an answer on proving the market. VCs don't necessarily put any value on a basic question of simpler product transactions. They want "eco-systems" and "crowd dynamics" and potential unicorns. You'd be better off with normal financing if you have demand for enough widgets to make a viable business, plus the bonus of not having to give up any equity to some disinterested finance bro.