There's another source of funds for entrepreneurs appearing... It allows unsophisticated members of the public to make small investments into companies that require funding. How does it work? Who does it? What are the benefits? Are there disadvantages?
According to DocSend’s research the 9th slide is the most important. Why? It is the slide that distinguishes you from someone with an idea and an expert who understands your customers’ needs. And that slide is…
The Competition slide.
The number of times I’ve heard “there is no competition” is remarkable. If you ever say this it demonstrates that you only have the idea and not thought about the current solutions. I will instantly know you have a very long way to go… and are a long way from being investable. Your pitch will be passed over very quickly…
To understand why the competition slide is so important you need to know the definition of competition. Competition is defined as “a contest for some prize, honor, or advantage” and we need to qualify it with one additional part “a contest for some prize, honor, or advantage to own a problem”. In other words you are in a contest with everyone and everything else that can solve a particular problem. Remember to think about how people are currently solving the problem – any method used is a competitor (for example, just because someone made a solution out of paper and string doesn’t mean that is not a competitor although it does mean they may be easy to convert).
You will have a solution – and so will many other people so why will they choose yours?
The answer is how you differentiate your solution so that people with the problem understand why you have the superior solution. There are 13 ways to differentiate your product from the competition – although some of these are not methods you’d want to use. For example, if the only reason your solution is better than the current solution is that yours is more creative, then you don’t have something you can sustain into the future - better to look for other ways to differentiate. Clues to how you differentiate will come from your knowledge gained from talking to customers – how do they think you are different from the solutions that they tried?
Typically you’ll have two or three ways that you differentiate your product from the current solutions (and these are aligned to your purpose that you started with right at the beginning of your presentation) so now it time to present the result. There are three standard ways to do this: quadrant, Venn diagram and using a table.
- Quadrant Diagram. Your differentiation strategies become the two axes of the graph and you plot yourself in the top right corner with the logos of any competition around the rest of the area.
- Venn Diagram. A Venn Diagram is three over-lapping circles. Each represents a different differentiation strategy and, of course, you are the only company sitting at the intersection of all three circles. Other solutions generally only appear in single circles or (at most) two.
- Tables. Tick tables can be used to show a large number of differentiation strategies compared with competition however the danger with this presentation is three-fold. First it is easy to end up listing features (rather than why you are different); second it makes a slide very busy; third you are limited to the number of competitors you can show.
You can see from this review that the Competition Slide provides the investor with a massive insight into the way you are approaching and understanding your customers’ needs. Are you surprised it is the second most important slide?
And next we will look at the most important slide which is only in 58% of DocSend’s presentations!