In the past few weeks I’ve heard perhaps 20 entrepreneurs pitch their companies. They share two things in common. First, they enthusiastically present their idea. Second, they all ask an identical question: how do I raise funding? And to that I respond that they are going to have a difficult time raising funds until they can answer 5 questions.
In a nutshell, what do you do that is unique and valuable enough to grab the attention of millions? If your idea does not appeal to a big crowd a VC cannot make a return. If your idea is not uniquely valuable you’ll never stand out in the crowd.
Which – and how many – buyers are apt to benefit most from what you do? “Lots!” is not a good answer. Your ability to quantify the market is a great test of two things: (1) your ability to pinpoint your offering’s unique value and link it to an identifiable segment (2) the headroom to grow and achieve scale.
What can you tell or show a buyer in under a minute that will cause them to want to take action? Buyers have notoriously short attention spans. If you need 30 minutes to explain and prove the value to a buyer, then your offering had better be priced in the $ thousands.
Who is your competition and, if they all knew about you tomorrow, how can you be sure that you can compete against them successfully one year from tomorrow? Every offering has competition. For starters, you can either spend $1 or save it. Either door opens thousands of choices. Answering this question – validly and reliably – shows that you know the playing field, and that you have constructed and protected your offering in such a way as to make it difficult to copy.
Why are you and your team indispensable to the success of this undertaking? If your smarts, drive, vision, tenacity, skills and aptitudes make you a tough act to follow then you and your team are going to prove to be a persistent, cagey and agile competitor. What VC would not want that hole card in its deck? It’s a competitive advantage in and of itself.
It’s a competitive advantage in and of itself.
Having answers to these five questions may not guarantee funding, but they are apt to get you serious attention.