Pitch Workshop Tip #5: Why Investors Search for Alternatives to Your Product Solution
Two guys are out on a small sailing boat. The new boater asked the “captain” why he stays so far from the shore since there are so many fish near the shore.
“Because finding rocks with the bottom of my boat ruins my day and my investment!” said the captain.
That’s how investors feel about using their investment to find the alternatives to your new product.
Yesterday I attended another pitch workshop event in Silicon Valley. The founders came prepared. They had their validation, impressive user stats, and even a great sounding tag line.
Then the investors began questions about competition and alternatives. They had answers. But the investors weren’t buying it. Repeatedly they peppered the founders with questions. It was brutal.
The founders, both techies, and not experienced in B2B or B2C sales, missed ‘it.’ It is the “alternative” solution to solve the fundamental problem – not only the direct competition.
Smart investors will always look at the alternative ways to solve the problem. They want their “precious resource,” i.e. cash, to help grow the business. But, they don’t want the founders to use that cash to discover what they should already know. Can you blame them?
Here are “alternative” competitors:
A sports app with real crowd experience for when you are alone and want to hear the crowds – with NO COMPETITION.
The Alternative: turn on the TV, watch on the Internet or go to a pub and yell with the other guys.
Rechargable nanotube power charger at $75 plus with NO COMPETITION!
The Alternative: $1.99 battery at the drug store.
Deluxe menu app for high-end restaurants – easily change the prices, description and pictures of the food.
The Alternative: paper menu – for high-end restaurants, talking with the sommelier and waiter is much more of the experience then reading the menu.
Just about all problems have alternative solutions. Founders need to find these alternatives before the investors put their money in. Investors don’t want you to use their money to find where the rocks are that sink your boat.
Come to the next pitch event and and learn more about navigating to engage investors in your startup!
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