“They brought up companies we didn’t even know existed,” Mike said in our debrief after a startup pitched to the Venture Capital partnership where I was an Entrepreneur in Residence (EIR). Everyone was impressed with the CEO, the company, and we decided to continue forward with the investment.
There’s a natural tendency when you’re asked about your competition to say something negative about your competition, However there’s a better way to explain the competition.
You need to recognize you have a golden opportunity to explain your position in the market when you explain the competitive landscape.
The CEO I watched explained the competitive landscape in a masterful way. He didn’t shy away from the competition. Instead he embraced the competition.
Remember, you have the ability to frame the discussion about the competition on your terms when you present your competitive analysis. The best example I’ve ever seen in the public domain is LinkedIn’s Series B pitch.
Take a look at what Reid Hoffman, LinkedIn’s CEO at the time, did in three incredible slides:
Slide One: Framing the discussion on your terms.
The pitch is dated August 2004, but notice the data in the market share information is dated February 2004. Hoffman is setting up a devastating one-two punch.
LinkedIn’s market share is already really good in February 2004 at 54%. And he’s truthfully showing all the other competitors market share too.
Then look at slide two in the sequence:
Hoffman is able to show their market share grew 20% in 6 months. It game over at this point.
Then he adds the clincher in the third slide:
The obvious question any audience has is, “Why are you going to win?” This simple four quadrant explanation of the competitive landscape, combined with the market share information, is Hoffman’s answer.
Your company might just be starting out, so you likely will not have the huge market share advantage LinkedIn had, but you can explain how you are different than your competitors. The key to a winning strategy is explaining how you are different in a meaningful, defensible way from your competition.
That’s what Hoffman was able to do. That’s what the CEO I saw present to us do as well. He was able to explain all the strengths of the competition AND he was able to explain how his company fit and why they would win.
Your job when you’re presenting to investors is making it easy for investors to understand what your company does.
You should know more than your competitors do about the competition you are facing. By making it easy for your investors to understand the competitive landscape by explaining the strengths of your competitors, you will gain your investors confidence and increase your chances of getting an investment.
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