I’ve started up and early sales have been strong. However, I don’t really know how to gauge how popular my product (medical prosthetics) will be in the marketplace in the long-term, in order to lure an investor. How can I convince an investor that I’ve got a long-term proposition?
To convince an investor that you have a viable long-term business I would recommend that you focus your initial efforts answering two key questions:
- How unique is the product?
- What is the route to market?
In answering the first question, you should articulate why your product is superior to the alternatives and how you plan to maintain this lead in the face of increasing competition.
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We often see early stage companies bring out innovative products only to see the established players bring out a similar product, or adopt some of the key benefits.
An example might be the adoption of more lightweight materials such as carbon fibre.
If this occurs the incumbents always have an advantage in that they have access to established distribution networks that will allow them to win the customer, despite offering an inferior product.
The second question is far more important – how will you find your customers?
Are you planning to sell directly to consumers or do you plan to sell via a distributor or existing sales channel? How does your sales strategy give you access to the appropriate market share?
A good strategy with a medical prosthetics is to work with patient advocacy groups. They generally are more passionate in improving outcomes and will be your best marketing arm.
Customer endorsements will be important in convincing an investor. You will need to demonstrate how you have translated your early sales success into a sales funnel/distribution network.
For example, you may now be generating all your sales through a web strategy with support from an advocacy group.
Hopefully the investor would like to learn more and you will have the opportunity to explain all other aspects of the business, including how the company is going to make money.”
Written in conjunction with Starfish’s investment principal, Dr Michael Panaccio.