As any founder will tell you, venture capital funding is not easy to come by. The bar for investors is rising as more startups race to market. While some early tech companies pitched investors by simply sharing their idea or presenting weal prototypes, that approach doesn’t work anymore.
There are two optimal scenarios for digital product startups seeking pre-seed and early seed funding. I’ll provide insight on how to earn buy-in from investors at the seed stage.
Scenario 1: You Have a Product
Having an MVP prior to pitching for capital is the best-case scenario, as a product demo is impactful on the path to landing funding. Not only do investors want to know you have a winning idea, but they also want to see it. Some investors even refuse to listen to a pitch with no product.
That said, there’s also little room for forgiveness when it comes to poorly-crafted, slow-moving and non-intuitive digital products. In other words, something is not always better than nothing.
When I started collaborating with investors in 2017, one of the most common pains I heard was increasing deal flow. In 2021, it’s the opposite. An increasing number of startups, a remote-friendly investing environment, and a proliferation of cheaper technology have all led to more deal flow than investors can handle. To counter this, many investors set stricter requirements for investing. Often, investors make exceptions for products that look “special.”
These “special” products are simply amazing. To keep up, startup founders must look more polished than ever. At Innovatemap, we often work with founders who built a digital product that’s not performing. In these cases, we either enhance the product’s look and feel or completely revamp it. As product and investing has matured, addressing UX and product issues at an earlier stage is expected. To impress investors and land funding, founders must ensure their product is better than the rest.
Scenario 2: You Have a Vision and a Brand
If you have an incredible idea without a working product, one thing is certain: your product vision and brand must be thoroughly developed.
When you don’t have an actual product to show investors, your pitch deck is your ticket in. To earn buy-in, your product marketing (including positioning and messaging) and brand must clearly convey your product’s value and immediately resonate.
To ensure your pitch and product site stand out, prove you understand product, product design and brand. Yes, you can showcase that knowledge without a working product. Not all VC’s — even those who invest in digital products — know the ins and outs of product. Identify the user experience, customer journey and the design elements that will make your product valuable to users.
Don’t forget to hone your messaging (and avoid throwaway phrases like “end-to-end,” or “comprehensive”). Be clear who your product is for and who it is not for. Yes, the draw to define a TAM that’s in the billions is great, but the path to get there can be thoughtfully plotted out with targeted positioning and highly-catered buyer-focused messaging. Not only will this shine a light on your product, but it will highlight you as a founder.
Many investors are evaluating not just market potential, but founder potential and legitimacy. Showing product expertise in a thoughtful, well-researched presentation or product site compensates for a lack of actual product.
A sophisticated digital product plays a critical role in a startup’s growth trajectory. And while most VC’s know this, they are often not equipped to provide product strategy and development expertise that startups need.
At Innovatemap, we equip founders with the product strategy expertise that they need to resonate with investors.
Learn how our product experts can help you sell your vision to investors.