How can we convince investors that we're different?
Hey all,
We're a startup. We have been talking to investors and the most common question we get is "How are you different from so and so".
And we tell them the point of differentiation but it's still not satisfactory enough for some.
And then we look at the investor's portfolio and most startups are similar to other big companies that we've heard of (like event planning and food delivery apps, fintech etc.) .
I mean, we see similar startups all the time. Netflix and Binge, Menulog and Doordash etc.
So, I wanna ask the entrepreneurs here, how do you all answer this question?
What are the other companies saying despite being pretty similar to their competition. How do you also prove your defensibility from this competition.
While I’m just starting out in the indie hacker space myself, I have a lot of random past experiences that can mostly be applied to any future ventures. In your case, I would do a small study of movie pitches and log-lines. It’s pretty interesting and may help!
The pitch technique “x” meets “y” is really neat. In movie terms, could be something like Vampire Academy - Twilight meets Harry Potter, or something along those lines.
Maybe the same could be applied to most disruptive business models. AirBnB - Homeowners meet hotels, etc.
This technique could possibly help when pitching to investors!
Hey Kylo! That's a great point! Thank you so much for the amazing idea.
By giving an example of an x and a y - it's easier to visualise for the investors as well.
Absolutely!!
Hi Drytinall, I do think that similar-looking startups have their differentiators. e.g., Netflix has a collection bigger than others while Binge boasts exclusive content.
If there's a feature that your product tackles better than others, you can highlight that, "We do <this> 10x better than our competitors" e.g., better search, best product selection, fastest onboarding flow, etc. It reminds me of the Kano model. You basically pick one 'delighter' feature and beat the s***t out of it :)
Design can be a good differentiator. Sometimes, one cool animation like this (https://codemyui.com/cute-puppy-login-form-design/) or unique aesthetics like in this app (https://loona.app/) can uplift your entire user experience. Provided your overall design is user-friendly, of course.
Wish you all the very best in standing out 🙌
I think instead of trying to get better at talking to investors, you should spend your time executing and getting your metrics better.
If you've got good revenue or user growth numbers the investors won't ask you these pesky questions. However I understand some businesses can't get started until some investment money has come in.
Investors invest in similar startups all the time, so two potential angles to this. One may be you are not clearly communicating the value of your point of differentiation (is it based on tons of customer interviews? have you tested it? are you tapping int a market your competitors can't)? I think this goes beyond just saying we do X differently: it's explaining why X is compelling. The second angle may be your team and your "unfair advantage" - what do you have that others don't? It could be someone who has deep expertise in your space, someone who has done this before in a different space, etc.
Might it be possible that your idea is not different? I mean, if VCs are saying that... Then again we are now in a phase where it is harder to acquire capital.
Are you aware of the concept of USP? You definitely need one of those.
Probably when VCs ask that, they are also asking about how you are going to carve out a piece of the market and how are you going to defend it from other players and entrants. Which should be a part of your business strategy.