Pitching your product in a post-unicorn quarter

Although market analysts have pegged 2016 as a sluggish year for small and mid-size companies seeking VC funding, they have more positive outlook on financial opportunities that may be available in 2017. The singular focus on funding the next unicorn, the name given to startup businesses valued at $1 billion or more, has been cited as the reason VCs were reticent to invest in smaller organizations.

As the rate of return for the investments in this type of company did not meet expectations, investors are shifting their emphasis from the mythical to the mundane. Returning their gaze to smaller startups, venture capitalists are in a position to interject funds where they may be better utilized.

What this means for your company is that there may be more funding opportunities available in Q1'17. A PitchBook report revealed that in the first six months of 2016, 134 VC firms raised $22.5 billion in funding rounds, a record-setting amount. In referencing this sum and the shift in the VC investing strategy, analysts predict that venture capital firms are "well-positioned to take another look at early-stage deals, now very reasonably priced, and once again invest in them liberally."

This is not to say that investors will throw money at just any start-up company. As most entrepreneurs are aware, competition for cash infusions among small companies is fierce. Perfecting a pitch for funds is a basic requirement for retaining the interest of a venture capital firm.

Designing a presentation that answers these questions will help you anticipate and address concerns investors may have when allocating their funds:

1. What is the product?

When presenting your concept to investors, it's best to use straightforward style that is heavy on specifics and light on nebulous predictions. Those who have a prototype available will have an advantage, as the investors can manipulate the object to see how it can be used. Investing in the development of this model demonstrates a commitment to moving beyond the conceptual. It also highlights the relationship that your company has established with a manufacturer. Taking this step without outside investment will show that your company does not need hand-holding to get the product to market.

2. Why should I care?

Having shared a sample of your work, you can then explain how it will be used to exploit an unmet need in the market. Identifying the type of customer interested in purchasing this product and presenting data on this customer's purchasing power establishes that your company is investment-worthy.

3. How has this product been received in the market?

Specifics about the product's rollout and reception will reveal the efficacy of your company's marketing strategy. A discussion of the product's public reception supports your opinion that there is an established need for the item your company is selling. Hard copies of sales figures further bolster your claims.

4. What obstacles to success exist?

Investors know that no product line is without flaws. Glitches can prevent products from filling store shelves on time. Competitors can copy goods and undercut you on price. Identifying these challengens and then presenting solutions for these issues reveals foresight and a realistic perspective. If you have protected your intellectual property, documentation of the trademark, copyright or patent shows that you have a means to defend your product when you introduce it to the public.

For many companies, obtaining an audience with a venture capital firm can be a once-in-a-lifetime opportunity that should not be squandered. In 2017, firms may have more funding on hand for smaller companies; however, these investors will be judicious in how they distribute sums. Prepare accordingly.

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