Standing Out in a Bear Market
In the current economic climate, where VC funding is down over 60% YoY, you need a truly differentiated story to secure venture financing. So what can you do to stand out in the crowd? How can you frame your story to shine among dozens of others? What factors besides your product itself can contribute to your success?
Howard Fischer is an ex hedge fund CEO and co-founder and chief evangelist of Gratitude Railroad, an impact investment platform that seeks to leverage capital to address climate change and social justice. We sat down with him to discuss how founders can effectively communicate what sets their business apart in the current macroeconomic climate.
Defining what makes you different
Your business needs to have a distinctive quality that sets it apart - this could be your product, a great backstory, or an incredibly charismatic founder, but whatever it is, it needs to grab the investor’s attention early in the fundraising process.
Think about the qualities that give you an edge when you’re held up against your competitors. Investigate the other companies who are tackling the same problem and chasing the same investment as you, and analyze their offerings so you can articulate what makes you either different or better than them, and consequently more worthy of funding. Crucially, you should never claim you don’t have any competitors - this will only make you look naive and uninformed, since they almost definitely exist.
You should also look at the macro conditions surrounding your company that are enabling your success in a way that isn’t true for your competitors. Why are the market conditions uniquely favorable to your company at this specific moment, and how do you plan to make the most of them?
Tips for grabbing investors’ attention when pitching
1. Balance optimism and realism
Many founders feel that making idealistic proclamations about their clear road to success is the only way to get investors to take them seriously. But if everything truly was perfect, you’d be swatting away investors. Setbacks and obstacles are unavoidable - especially at the present moment, when the market is rife with risk and concern. Investors know this, and if you’re far too optimistic and have an easy answer to every hard question, it’s a red flag. Instead, show some humility. While a certain level of confidence is necessary to build others’ trust in you, be authentic and avoid overpromising by making sure all of your projections are grounded in reality.
2. Take measures to cushion the risk
A rare quality that will stand out to an investor and make your company more attractive is if there is something that helps mitigate the risk they’re taking on by putting their money into your company - for example, if you have a close relationship with a leading funder or a strategic partner. Partnerships with larger, well-established entities such as city/state governments or corporations give you credibility and stability.
Also, having tested your product in the real world can give you a leg up with investors. If you can meet them with hard data from a commercial pilot on how your product interacts with complex production, market, and customer dynamics, they’ll have greater confidence that you can mitigate any concerning risks.
3. A unique approach that goes beyond your product
Providing a unique product that your customers will appreciate more than your competitors’ is a fundamental, non-negotiable part of attracting investment and building a profitable business. Your offering, however, is null without the other, more intangible external factors that impact your success - your IP is just one piece of the puzzle. Your branding, partnerships, and network all have an equally dramatic influence on your chance of securing investment - don’t overlook the importance of communicating these as part of your opening pitch.
4. An amazing story
Another quality that will set your business apart is a story that’s so interesting the investor will want to share it with their friends, even those who aren’t in the business world. If you’re simply going through the motions or just flipping the pages of your deck, the investor will check out. The benefit of crafting and perfecting an emotionally resonant story early on is that it’ll also help you connect with customers further down the line. Particularly, incorporating your personal narrative will engage investors in a way that makes you truly stand out– and give your story a why rather than just a how.
5. Presentation is key
How you tell your story matters as much as what you say. Your conviction and passion should shine through in your pitch, and make any investor excited about your company. Telling your story in an engaging and effective way is an unavoidable hoop you’ll have to jump through in order to secure investment, so you’ll either need to learn this skill, or recruit a co-founder who can take on the task.
6. Don’t rely on visual cliches
You want your deck to be unique and memorable, so don’t conform to the overused imagery you think investors expect - for example, using a table with various boxes ticked that shows your benefits compared to your competitors or monochromatic shades of green. Think of other original and visually appealing ways you can get your points across while still being clear and concise. This doesn’t mean you have to overcrowd your deck with imagery– rather, incorporate a few striking components that will catch the investor’s attention. Synthesize your data in a digestible way, whether that entails an appealing graph, a short video, or something else. Creativity will pay off in the race to stand out.
Howard Fischer is the Chief Evangelist and Co-Founder of Gratitude Railroad. He attended Harvard’s Advanced Leadership Initiative as a Fellow in 2013 and as a Senior Fellow in 2014. In 1994 Howard founded Basso Capital Management- a hedge fund management company. Prior to the founding of Basso, Howard worked as an accountant at Price Waterhouse and Salomon Brothers. He traded convertible securities for Lipco (a hedge fund management company), Smith Barney and Drexel Burnham Lambert. He has an undergraduate degree in accounting and finance from the Wharton School of the University of Pennsylvania. Howard has board roles at DoneGood and Soil in Formation (for profits), at The Carbon Underground and 1% for the Planet (501c3s) and advises Bright Edge the Compassionate Leaders in Finance Program of the Garrison Institute. He lives in Armonk, NY with his wife Randee and is an active cyclist, hiker, skier and snowshoer.