Every entrepreneur needs financing for their business. Whether it’s seed money, second round or rocket fuel, most early stage businesses are actively seeking financing. And this access to capital is what 95% of companies struggle to find.
This is partly due to the nature of the business and partly due to lack of preparation and knowledge. Contrary to conventional industries, the technology business is all about the idea and often requires a “leap-of-faith” investment (ie. investors will supply capital based on the strength of the management team, the quality of the idea and the diligence that’s been done on the planning side as opposed to secured loans). The tech company has no assets and more than likely can’t get a traditional bank loan.
Furthermore, like it or not, there are hundreds of thousands of people out there that have a technology product/idea that they think will “make it big”. We guarantee that if you’ve thought of a great product that fulfills a need in an unserved market, 50 people have thought of the same idea. I don’t mean to be a downer, but many others have thought of the apartment cleaning robot that you’re in the process of designing.
Bottom line: thousands of entrepreneurs are competing for the same dollars. Who gets those dollars? It comes down to a function of the four P’s (not the marketing P’s): the people, the product (or service), the planning and the pitch.
So, what am I getting at here? Well, technology investors see thousands of people, products, plans and pitches.
PITCH MISTAKE #1: Entrepreneur has not done their diligence
You would be shocked at how many entrepreneurs are hung out to dry when they are asked by investors what their competition is doing or how competitive their market is. DO YOUR DILIGENCE! You absolutely absolutely need to know your competitive market, including both your direct competition and your indirect competition. You then need to figure out where you fit in – this is essential when presenting your product to investors and accurately forming your value proposition.
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