The Pitch: Traction, Team and Competition– July 13, 2020 by Jeff Kovacs

Our blog series shares the key lessons we have learned about developing and presenting effective investor pitches. Whether you’re a company seeking investment, an advisor helping companies create their pitches or investors attempting to find that perfect investment, we hope you find value in “The Pitch.”

Today’s post shares the next steps in the pitch process – measuring traction, evaluating your team and knowing your competitors.


1. Measuring Traction – Making Progress Toward Your Goals

Tracking key metrics such as sales per customer, number of users, volume of traffic to a company’s website, app downloads and other measures of performance is critical to helping an investor understand whether customers will actually adopt your solution, service or product. If an investor isn’t confident that your company has gained traction in a market willing to pay for these offerings, they will politely defer future conversations until you can provide evidence of adoption.

The development and implementation of appropriate tracking policies, procedures and tools early in a company’s life cycle provides critical insight into product/market fit. Metric development and tracking are an insightful management tool that allow the management team to adapt quickly and pivot away from solutions the market may not buy and toward a market that provides opportunities for maximum revenue generation.

Metrics need to be chosen carefully to ensure that only data points relevant to understanding the level of market engagement are collected and analyzed. Too much data or data that does not clearly provide evidence of product/market fit can lead to lengthy data collection processes and poor decision making.

Customer anecdotal evidence can be highly valuable in understanding how customers interact with your offerings. Investors will often interview customers to gain insight into these experiences and obtain evidence about market traction before deciding to invest. Understanding what is working well, not working well and the barriers to further adoption are typically critical to a company’s ability to scale and attract investors.

2. The Importance of Your Founders, Team and Identifying Needs

A company may have wonderful technology or services, a large addressable market and tight fit with the company’s products, but without the depth of talent to drive the company to scale, growth will falter and valuations will suffer. Founders and key team members are often the difference between companies that thrive and those that fade from existence.

Investors need to be comfortable with the team that is currently in place, their unique ability to bring products to market and fully commercialize them. Investors also need to have an understanding of key positions that are currently unfilled and management’s strategies to attract the appropriate talent. Investor comfort is derived from technical knowledge and experience in each individual’s domain. Prior experience starting and running companies, coupled with the ability to execute strategically are also essential elements for growth. It’s not always necessary to have all of the talent pieces in place at the time of investment, but there needs to be a cohesive strategy to acquire this talent with the investment.

3. There’s Always a Competitor

One of the comments that I sometimes hear from entrepreneurs is “we have no direct competitors.” I see this as a complete lack of understanding of what competition truly is. Sometimes the status quo is competition if the market is unwilling to adopt a company’s product or services. Often, a company may have competitors that it has not even considered because the competitor has not been clearly identified and evaluated.

Conducting market research to thoroughly understand potential sources of competition is fundamental to identifying competitive risk and positioning the company to differentiate its products and services. Preparing a simple SWOT (strengths, weaknesses, opportunities and threats) analysis is often an effective way to frame your company’s strengths and weaknesses relative to the competition. Companies must understand their competitive advantages to be able to exploit a first mover advantage or create barriers to entry for their competitors.

A deep understanding of the appropriate combination of price, features and performance for your products and services provides a powerful advantage to fuel growth, market share and investor interest. Without this understanding, investors are likely to view the management team as unsophisticated and the company not worthy of investment.

Look for the next installment of The Pitch, focusing on risk, intellectual property and finance.

Please contact a member of your service team, or contact Jeff Kovacs at jkovacs@cohencpa.com for further discussion.


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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.