Part 1: What’s Your Entrepreneurial Story?
As we outlined in our last blog post, fundraising is a sales activity. You’re showing a product to a pipeline of target “customers” – in this case, a group of VCs. And a key component of selling is how you position the product with the customer.
In a VC pitch, what then is your product? No, it’s NOT just your company. It’s also you, your co-founders, and your team. The team is crucial for Seed/Series A pitches, and especially for YOU as the founder. Positioning happens at the intersection of you, your team, and the business. You need to weave all of these into a compelling story.
That’s the simple secret of those teams who raise $15M pre-revenue Seed rounds. They’re experts at positioning their pitch.
As a VC, one sees many common positioning themes emerge – some more compelling than others. Here are some of the most investable ways of positioning yourself with VCs:
Let’s look at these four positioning archetypes in more detail:
- Heard saying: “I don’t care that you can’t sell ads on Pokemon Go. I think we can crack it.”
- Founder traits to emphasize: willingness to experiment, your “lean” mindset
- KPIs to pitch: fast deployment cycles, rich product roadmap
Being inexperienced as a founder isn’t a bad thing in a pitch. In fact, with the right positioning, lack of experience can be a huge asset. That’s the essence of the Rogue; she has no idea what she can’t do.
It’s counterintuitive, but the Rogue must emphasize that naiveté. The Rogue is someone who will do everything the status quo already “knows” is bad—fearlessly, relentlessly, and unapologetically.
Sure, the Rogue will do a lot of stupid things that don’t work. But the things that work: that’s the very definition of innovation.
To take this positioning in a pitch, you need to share your great ideas as specifically as possible and your strong conviction to execute them. It’s good if these ideas are a little bit different; being perceived as a copycat/fast-follower kills this positioning. Finally, show high energy and exuberance for your business.
- Heard saying: “I encountered this problem every. single. day. as an insurance broker.”
- Founder traits to emphasize: your adjacency to the problem, industry knowledge
- KPIs to pitch: large total addressable market, >10x product value delivery
The Insider has stumbled into a problem with his industry, and is now leaving her job to build the solution. You are the target customer for this business, so you’re the best-placed to build the solution.
This positioning is (unusually) more about the sector/opportunity than the entrepreneur herself. As the Insider, you must emphasize the size of the problem, drawing credibility from your insider knowledge. It’s essential to start your pitch with the problem/solution pair—sometimes even starting with a short “day in the life of a…” story.
For your own personal positioning, you need to show two things:
- Passion for the problem: This is where the “problem keeping you awake at nights” story really resonates.
- Adjacency: You understand the problem better than anyone because you are the target customer of this business.
- Heard saying: “This product will change the way people think about brushing their teeth…forever.”
- Founder traits to emphasize: big picture focus, vision, confidence
- KPIs to pitch: product engagement data—dwell times, feature usage, conversion rates
The Iconoclast has a preternatural understanding of the human psyche. She understands what the people want better than the people do. Henry Ford was the original iconoclast.
As the Iconoclast, your personal positioning needs to reflect that. The important elements to project are confidence and vision. Be prepared to be articulate your vision explicitly. Paint a picture in the minds of investors. Elon Musk is a master at this. A person gets excited just reading his product vision statements.
Finally, validate your vision with examples from your previous successes. The Iconoclast has a wealth of consumer understanding to draw upon, and is usually a serial entrepreneur, all-star product manager, or both.
That’s why in this archetype, the product is more important than the business. Try not to get stuck in execution details. Focus on how you’re going to change the world…again.
- Heard saying: “I know a great head of sales from my last SaaS business. Let me make a phone call.”
- Founder traits to emphasize: Breadth of experience, large support network
- KPIs to pitch: Revenue growth, profitability, and exit valuation of PREVIOUS companies
The Pro has done it all before. She’s more than just a former Insider who’s had a successful exit. The Pro has worked across multiple sectors and functions, and is often a “Professional CEO.”
As such, the Pro conveys steadiness and confidence in all situations and a breadth of knowledge across functions and business types. As the Pro, be prepared to tie in your current business with examples and stories from your previous roles.
You’re really the opposite of the Rogue; you’re investable because you will waste no time screwing around. You know what works, and you’re doing it later today.
The actual business doesn’t matter that much in the Pro’s pitch. If she can sufficiently sell herself, her own confidence in the business model is all that’s needed.
So why these axes, and where do I fit in?
You may wonder why we’ve chosen these particular axes. It’s true the startup landscape can be split thousands of different ways. There are other valid splits and archetypes. We’ve just selected these two because consumer/enterprise and founder experience are two early points that VCs will take under consideration in your pitch. VCs use heuristics such as these when evaluating opportunities.
Founders may ask themselves if they’re a new or experienced founder. The easy rule of thumb: if you don’t know, you’re inexperienced. Beyond that, if you’ve raised several VC rounds or had an exit, you’re likely experienced.
Don’t forget though, that this isn’t a continuum. Insiders don’t necessarily “graduate” to Pros. These are discrete positionings applied to four independent stories, so triangulate yourself against the archetype rather than the labels.
Part 2 – The Three Universal Truths of Positioning:
Finally, let’s take a step back for perspective. Don’t forget that there are certain elements that common to ALL positioning stories, regardless of your archetype:
- Focused: One problem, one business. Investors are allergic to feature creep, so your positioning should succinctly affirm your commitment to doing just one thing well.
- Story-oriented: Storytelling is a lost art and investors react to a great one. Tell a value-driven story that illustrates you and your business.
- Cash-ready: The most compelling pitches show that everything is in place, and all that’s needed is capital. Your assumptions are confirmed, your team is in place, and once you pour cash into the tank, the machine will magically and effortlessly take off into the stratosphere.
And above all else, be credible. Only position yourself as one of these archetypes if you think you actually fit it. This list is not exhaustive so if these don’t fit, think of a more appropriate archetype that does. Find the combination of traits that have led you to be successful thus far, and lay out your own best messaging, narrative, and positioning in advance of your pitch.
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