For Founders: How to Effectively Address Competition in Your Pitch?
Over the past years, the entrepreneurial ecosystem has changed considerably. Good news for founders is lower launching costs and more capital available. But this has led to increased competition.
As a result, understanding the competitive landscape is key to make investment decisions. Investors spend an increasing time looking at the different players in the space and understanding what’s the USP of the opportunity at hand. That’s why founders should proactively take this as an opportunity to better explain what’s different and unique about their product or service in their pitch. It is hard to be impartial when assessing competition and this might be why competitive landscape often look like this:
Graph 1 says:
This is how I Score versus the other Players when I play the Games “Something we are great at” and “Something we are also not bad at :)”
This means that we are asked to trust the founders on 3 important matters:
“To apprehend this market, the two more relevant dimensions to consider happen to be “Something we are great at” and “Something we are also not bad at :)””
“We don’t have any other significant players in the space”
“This is how my competitors are rated”
Interestingly, the discussion is often around Players and Scores — “We are cheaper than X”, “We have a better UX/UI than Y” — but it is rarely centered around the Games.
But I wonder…
In my opinion, discussing competition should always address the Games first as it is the very base of your competitive positionning.
The Games (= axes of your graph) are a consequence of:
- Current customer segmentation (e.g. in B2B you’d consider type of business, company size, industry, etc.);
- Customers’ needs and expectations. This is the cornerstone: competition and market positioning of your business always start from a sharp understanding of your clients. What do they really want? Gathering data from initial customer feedbacks, prospects interviews, and surveys has a huge value. Make sure you share those insights and spend enough time going through your learnings about the customers in your market.
- What the future looks like, i.e. what’s your vision about the market (systemic change, evolution, etc.).
VCs need to have a discussion with the founders to address the Game as it requires a deep knowledge of the industry and the customers’ needs. No one better than the founders can share their vision about the market they’re tackling. With that, investors can then do their homework and build their views around Players and Scores.
Why playing these games?
Most often, the customer’s decision to buy your product or your competitors’ depends on what is often called the Key Purchasing Criteria (KPC). For a given market segment, KPC shows how customers rank (sometimes unconsciously) different solutions based on some specific criteria and ultimately choose the solution they think has the best score.
Coming up with a two-axis graph starts by listing the 3-5 KPC of your market segment and positioning the competition in 2-3 distinct groups that correspond to different levels of value proposition.
For instance, if you run a startup editing some cloud-based CRM, your 5 KPC could be Price, Usability, Integration, Analytics and Community.
Great could stand for:
- Price: 0-$9 per month per user
- Usability: Very modern UX/UI and mobile application rated at least 4/5
- Integration: From 100 integrated software including the major ones …
- Analytics: Comprehensive dashboard including at least X KPIs (Conversion Rate, Average time per User …)
- Community: From 10,000 active developers contributing to the community
So-so could be defined as:
- Price: $10-$49 per month per user
- Usability: UX/UI from the 2010s and mobile application rated up to 3.9/5
- Integration: From 10 to 99 integrated software
- Analytics: Dashboard including only a few KPIs
- Community: Up to 9,999 active developers contributing to the community
And Terrible could be:
- Price: From $50 per month per user
- Usability: Very poor UX/UI and no mobile application
- Integration: Up to 9 integrated software
- Analytics: Very poor analytics dashboard
- Community: No active developers contributing to the community
You won’t probably go through this full analysis during your pitch, but this is something you could add in appendix or share with investors as a follow-up to your meeting.
During your pitch, you might want to simplify this by merging groups and/or focusing on the 2 most relevant KPC for the niche you target…
… and transform it to a 2-axis traditional mapping.
Hopefully you’ll simply get back to the Graph 1 we mentioned above ✌
Summing up our piece of advice:
1/ Take time to carefully think of and understand your customers’ segmentation, their expectations, and how you expect this to evolve based on your vision about the market.
2/ Extract 3–5 KPC to explain how the competitive game is played and how you position on these KPC compared to your competitors.
3/ Give a more visual & simplified view of the market mapping competition.
About Kerala Ventures
Kerala Ventures is a VC firm investing in early-stage tech startups (SaaS, marketplaces, AI, data, tech-enabled services …) based in France.
Our first investment ranges from €100K to €1.5M and our portfolio includes 15 companies.
The Kerala team is insanely focused on bringing massive strategic and operational support to its entrepreneurs:
- A strong operational support on hiring (93 recruitments for our portfolio since 2015 thanks to our private hiring network first20.club)
- Actionable expertise in supporting growth (Doctolib, Lafourchette, Evaneos, …) with hundreds of employees & tens of millions of Euros of revenue
Find out more about us at kerala.vc