Growth5 Blog

Tuesday, March 24, 2009

When You Are the Product

Our Chief Marketing Officer, Greg Conderacci, wrote a great note to non-profits yesterday, reminding them to know what they're selling when they are raising money.

Raising money for a startup is no different. You have to know what you're selling, it's you.

David Feinleib of VC firm Mohr Davidow Ventures posted a great article over the weekend titled "When You Are the Product" - here are some highlights:

1. "When you’re pitching to customers, your product is a piece of software or hardware, a service, or a web site. When you’re pitching investors, the product is you."

2. "When I say you as a whole product, I mean whether you:
  • Present effectively
  • Can recruit, sell, and communicate a big vision
  • Know more about your domain than anyone else
  • Think strategically
  • Have the appetite to build something really big
  • Are a great fund raiser"
3. "Address Your Audience: It’s easy to forget that potential investors aren’t buying your product. They’re buying a piece of your company - the opportunity, the team to go capitalize on that opportunity, and the customers or users who are going to spend money to use that product."

4. "Three Key Messages:
  • This category will be big, and the time is now: your goal is to tell your investors what part of that $21B you’re going to crack, and why. The $21B is the Total Available Market (TAM). The segment of the market you’re going to own is the Served Available Market (SAM)
  • Show and tell how you win: By knowing more about your industry than anyone else, knowing your numbers inside and out, being clear and articulate, and having the best team possible to build the business, you show that you’re going to win.

    Then, try to address the following questions:What makes you more qualified than just about anyone else to do this? Why is your offering better? Why is your offering a must have? How are you going to win? What is your unique insight?
  • This is valuable and strategic: How will you get to $100M in revenue in five years? Again, it’s not enough just to show a chart with revenue going up and to the right. It’s critical to articulate how you’re going to get that revenue.

    Why are you a must have?

    Most importantly, why are you strategic? What is the larger ecosystem you’re playing in? Why will multiple large companies care about you? Why will they compete to buy you if you don’t IPO?"
5. "Conclusion: Investors spend a lot of time on the potential risks of an investment. Your goal is to get them excited about the opportunity and demonstrate that you will address the risks.

It’s one thing to tell investors you’re going to be successful. But show them you are and you’ll not only give a great pitch, you’ll inspire them to invest."

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