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At a minimum you have someone building it and someone selling it. One of the team members needs to know the domain very well. For example, a life science company needs someone with a deep knowledge of the space. For a consumer product company, you’ll need someone who knows the retail or direct to the consumer distribution channel.
Your product needs to be usable by customers and have some customer interactions with it. An alpha or beta version is nice but serious traction with investors comes to those who have a product in the market generating revenue.
If you have users show where they are on the path to buying your product. If you have paying customers show how much they are buying which is often referred to as lifetime value. It’s best to sell some units to demonstrate the product works and customers will pay for it.
Investors look for predictable revenue. The most common form of predictable revenue is recurring in which the customer has paid for the service in advance on a recurring basis under a contract. If it’s an annual payment it’s called Annual Recurring Revenue (ARR). If it’s a monthly payment, then it’s Monthly Recurring Revenue (MRR).
Once a startup is ready to commercialize its product, you must determine how the product will reach its target customer. You can choose to sell directly or build distribution channels.
If you intend to file patents it’s best to do so before launching your fundraise campaign. Provisional patents are fine for early-stage companies.
Before you start laying bricks, you need a solid foundation. A successful startup marketing strategy follows that same principle. Before you jump into marketing your startup, make sure you have the following bases covered.
Investors look for a large market. Define your market for total available, serviceable, and beachhead market and be able to articulate the size and growth for each one. The total available is anyone who could ever use your product. The serviceable market is the market you are pursuing with your first product. The beachhead is the first twenty prospects you will approach.
It’s important to have an edge on the competition. What gives you a 30% increase in revenue or a decrease in cost? You need to be able to articulate your advantage over the competition.