Since I have been on both sides of the table, first-time founders often ask me what went on in investors’ mind while being pitched. It’s been written up a lot on the web, but I particularly like this simple three-why framework.
- Why it?
Why does your product need to exist? What pain points are you solving? What are your target customers using now because you haven’t built your product yet? Is it a vitamin or pain killer? Even if it starts off as a vitamin, can your product eventually become a habit-forming drug? Do your metrics support your hypothesis?
- Why now?
Why is now the best time to build this product? Was it not possible to build it a year ago? Is your target market growing or expected to grow due to some foreseeable changes in technologies, user behaviors, market demands or even distribution channels?
- Why you?
Why is your team the best team to execute this idea? What competitive advantages do you have over the guy next door? Do your cofounders’ skills complement yours? Has your team worked and shipped other products together? Did you build this to solve your own pain points? Are you passionate and determined enough to see this through for the next few years?
These three why’s have helped me evaluate both investment opportunities but also startup ideas I have. I hope they can assist you as well.
How would you answer these questions for your startup?