Here's what makes a startup stand out, according to University of Houston research
During your pitch, investors will be looking to see what your startup's value proposition is. What can you offer that your competitors cannot?
Imagine if you will, your startup develops a watch that can detect when you're about to have a heart attack, and automatically sends an alert with your location to 911.
You've perfected the design and engineering intricacies of the device. It's ready to go out and save lives, and make you tons of money in the process.
Now imagine you can't get this product off the ground because your pitches keep falling flat. Investors don't have confidence in you as an entrepreneur, even if your product is amazing. Remember, you can have an awesome product, but you won't reap any rewards if that awesomeness cannot be expressed to financial gatekeepers.
That's where the art of the pitch matters. Pitching to a venture capitalist might be the most vital part of your startup's success. This is where you express how important your product is or how in demand your services are. This is where you convince investors your product (and you) is worth investing in.
Next, you'll have to determine your company's value proposition, which is the heart of your competitive advantage. This tells venture capitalists why they should invest in your company and not others.
Investors are putting their money and reputation on the line for your company. Their leap of faith has to be as educated as possible. If you can educate them very thoroughly why your startup is different, why it stands out from the rest, investors will feel much more comfortable with their decision to reject other bids in favor of yours.
You don't only need to convince them to choose your company, you also need to convince them that rejecting the other companies won't come back to bite them in the rear. Nobody likes to live with regret, least of all people who put themselves in a position to lose millions of their dollars on a bad decision. The best way to reaffirm an investor's faith in your company is to provide a product or service that is fairly new to the market. New products mean less saturation and higher demand, especially if the product solves a problem or provides a unique function.
There are plenty of toasters on the market, but what about wireless toasters? Outdoors-people everywhere would surely line up to buy that. You're providing a product of real value to a certain sect of people. Your competitive advantage is that your toaster is wireless and portable. That would be your company's value proposition to your investor.
This article originally appeared on the University of Houston's The Big Idea.
Rene Cantu is the writer and editor at UH Division of Research.