When it comes to launching a new product successfully, businesses need to understand they’re building two products and two cases: one for customers and one for pitching a product to investors. The savviest of businesses never lose sight of which audience they’re talking to and the differences between them.
While it’s almost certain your customers are the group you know the most about, the second can ultimately have just as big — or bigger — impact on your product’s success. This is why it’s so important to think like an investor when pitching your product.
At Pivot International, we bring a nearly 50-year track record of helping companies worldwide design, develop, manufacture, and deliver successful products that are as compelling to investors as they are to end-customers. To ensure supply chain security, flawless product performance, and maximum market viability, we leverage advanced digital technologies, industry-leading talent that spans fourteen industries, and 200,000 square feet of scalable manufacturing capability across three continents. (Including cost-effective alternatives to China-based production.)
Understanding the Differences Between Investors and End-Users
Like end-users, investors are interested in the classic sales question, What’s in it for me? But in most ways, the similarities end there. Investors aren’t so much interested in your product, per se, as in the opportunity for ROI it represents. This begs the question of how to craft a persuasive narrative that will give your company the best possible chance of impressing your investor and securing capital.
Because investors are looking at so much more than just your product in assessing the opportunity for ROI, you’ll need to tell a story that communicates your company’s bigger picture. Here are some areas to heighten your focus.
The Whats and Whys of Pitching a Product to Investors
While it’s worth repeating that your product should not be the primary object of emphasis, it’s certainly your entry point into the larger conversation. With this in mind, you’ll need to speak concisely to two interrelated product questions.
First, what is your product, what problem does it solve, and what market opportunity does it allow the investor to capitalize on? And second, why is your product different enough from your competitors to tip the scales in your favor?
Keep in mind that you’re just laying the runway here with a high-level overview. This isn’t about a comprehensive presentation of your product, target market, or ROI opportunities. Rather, this is more about developing and delivering a killer “elevator speech” in a somewhat extended form. This portion of your presentation should function as an intriguing “teaser” for everything that follows.
Risks and Barriers to Delivery
Not demonstrating both the technical and market viability of your product over your competitors is a non-starter. But there’s another investor hurdle you’ll need to clear: risk.
Successful investors are among the risk-savvy people on the planet. Even as early as February of 2020, well before the US had implemented quarantine measures and the magnitude of the pandemic had yet to be understood, investors were expressing concerns related to supply chain risk. These concerns haven’t been put to rest. If anything, they’ve only grown.
It won’t be enough to convince your investor that you’ve got a winning product and sizable market demand for it. You’ll also need to convince them that your product can be cost-effectively delivered despite significant sourcing disruption.
In other words, come to the table prepared to provide evidence that you’re working with a proven supply chain partner that can reliably surmount these challenges and, therefore, dramatically reduce risk. For example, if you’re pitching an investor on a medtech product, you’ll likely need to demonstrate that you’ve identified China-alternative manufacturers in order to comply with recent regulatory changes.
Revenue Opportunities and Supporting Quantitative Data
Every portion of your presentation up to this point is just the springboard for a deeper dive into the nitty-gritty of the investment opportunity as communicated in hard numbers. Now is the time to provide solid data that quantifies the ROI your investor can expect to earn.
This includes supporting data related to industry profit margins, your pricing and revenue model, current users, and more. Pay particular attention to scalable systems; you may have to reduce the cost of customer acquisition.
A Documented Succession Plan
While you’ll already have a business plan, a succession plan can increase the opportunity-appeal for investors. Companies that are already prepared for the handoff to an investor are typically multiple times more profitable than those that don’t.
Knowing how to think like an investor and tailor your pitch accordingly, you’ll have a much better chance of securing funding. Regardless of where your company might be in the product development process — whether that be a proof-of-concept, prototyping, design, engineering, manufacture, or distribution — Pivot is a trusted partner for helping you move successfully forward.
To learn more about how we help companies seize opportunity and bring winning products to market in challenging times, contact us today.