Seeking Investment Capital For Your NPD?
Here’s How to Pitch Like a Pro
When pitching a product to investors, even the smartest people make mistakes that can cost them their funding. This is easy to do since a product innovation mindset is different from an investment mindset. The individuals most central to product innovation are naturally concerned with and focused on the product itself: what it is, how it works, why it’s superior to competitor products, and so forth. (In other words, they approach the product from an end-user perspective.) However, investors approach the investment proposition from a very different perspective. Because they rarely are interested in becoming end users, they come to the table seeking information that typically has little to do with the product itself.
Structural Capability vs. Finance Savvy
Over many decades, we’ve learned that successful new product development (NPD) depends equally on two factors. 1. Structural capability. (The competencies, skills, and technologies required for creating a tangible product.) 2. Finance savvy. (The intangible competencies, expertise, and insights needed for understanding, anticipating, and capitalizing on techno-economic trends and market opportunities.) To pitch your product successfully, you’ll need to step somewhat outside your structural capability mindset and step into a finance savvy mindset. This is also the difference between shifting from a features and benefits-driven pitch to an ROI-driven one. With this in mind, here’s a high-level roadmap for pitching like a pro.
Lay the Groundwork
Even though your focus won’t be on your product, per se, there’s also no denying that it represents a crucial piece of a larger puzzle. Your job is to help your investors grasp this larger puzzle in a way that lays the groundwork for why investing in your product is in their favor. To do this, you’ll need to provide a short, simple, accessible overview of your product, the problem it’s designed to solve, and the market opportunity it allows your investor to successfully seize. What you are essentially delivering here is a compelling “elevator speech.” Another way to look at it is that you’re asking your investor for a “date,” not yet knowing whether they’ll be interested and accept your invitation. That said, make your invitation as enticing as possible.
Overcome Obstacles Related to Risk
This is the point in your presentation where you’ll shift from a broad overview and downlevel to a conversation about overcoming barriers to success. To do this, be prepared to demonstrate your product’s technical and market viability over your competitors, factoring risk prominently into the equation. Professional investors are masters of risk analysis and risk mitigation. They are almost always among the first to identify and predict threats to ROI. Currently, some of the chief risks associated with NPD involve supply chain disruption.
So, not only will you need to make a case for the market demand of your product, you’ll also need to make a strong case on how you can overcome supply chain risk. Come to the conversation with evidence of potential supply chain partners with a solid track record of deploying highly successful risk-mitigation strategies. For example, say it’s a medtech or security-sensitive product you’re hoping to launch. If this is the case, you’ll need proof of suppliers that offer cost-effective alternatives to China-sourced parts and components.
Drill Down Into the Numbers
In the first part of your presentation, you mainly focused on making a favorable “first impression.” If all went well and your investor heard you through the second part of your presentation, you can consider the relationship as having entered the dating phase. The ultimate goal, of course, is “matrimony,” where commitments of capital are made and contracts signed. In this, the third and last part of your presentation, you want to pull out all the stops and take a numbers-driven dive into the nitty-gritty of the investment opportunity. (Documentation and supporting data related to industry profit margins, pricing and revenue models, current customers, and more.) End your presentation on a strong note by making a quantified and waterproof case for why it’s in your investor’s interest to accept your hand in marriage.
Pitching like a pro comes down to standing in your investor’s shoes while still standing firm in your own product expertise. By strategically combining an end-user perspective with an investment perspective, you’re much more likely to deliver a killer pitch that will secure the capital you’re seeking.
At Pivot International, we bring nearly a half-century of trusted experience creating product innovations that are as impressive to investors as they are to end-users. Our extensive product portfolio includes internationally award-winning products across fourteen industries, including medical, industrial, and consumer. With one-source, DFM-driven expertise that takes your product from prototype and proof-of-concept all the way through scalable manufacturing and distribution, we are a proven partner to companies worldwide.
No matter where your company might be in the product development process — whether that’s initial conception, prototyping, design, engineering, manufacturing, or distribution — Pivot can help you move successfully forward. Contact us today to learn more about how we help companies seize market opportunities and bring winning products to market in challenging times.