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Pitch Your Competitor’s Story to Sharpen Your Unique Value Proposition, Pre-Seed is Still Hot : #0072

March 06, 2024

“So, they say you should pitch your competitor’s story to sharpen your unique value proposition. It’s like going on a date and talking about how great your friend is. ‘You should see Steve, he’s amazing! But enough about Steve, let’s talk about me and why I’m slightly better than Steve in a very specific way.’”

06/03/24

Pitch Your Competitor’s Story to Sharpen Your Unique Value Proposition

Why Read (5 minutes):

  • Learn how understanding competitors' narratives can refine your pitch and clarify your differentiation.

Author:

  • Gil Dibner, General Partner & Founder at Angular Ventures

Link: 

Key Concepts and Tactics:

  • Highlight Industry Expertise by Focusing on Competitors' Narratives:

    • "Founders pitching their startups to VCs typically focus tightly on the narrative of their specific startup. In many instances, this is a mistake. There is a great deal of mileage to be gained by focusing on the narratives of the competitors and incumbents that came before. This can be a great way to highlight your industry expertise and share your insights on why your company has an opportunity to be disruptive."

  • Understanding the Competitor's History and Strategy:

    • “Last week, as I was doing customer diligence calls on a new investment (let’s call it NewCo), a customer referred to a competitor that I had not been focused on (let’s call it OldCo). He said that the NewCo was much better than OldCo. […] When I tried to dig deeper, however, into the way NewCo was better than OldCo, his answer became increasingly vague. I thanked him and ended the call and began looking at OldCo.”

    •  “I started engaging with the CEO of NewCo. Over time, the story began to emerge. The key thing, I found, was asking the CEO to step out of his perspective as NewCo and step into the perspective of OldCo. When OldCo was founded, what were they trying to do? What was their thesis back when they got started? How did they manage to grow so fast? Why have they not yet managed to get to profitability?”

    • “Gradually, as the CEO of NewCo began to describe the perspective OldCo in his own words, the story of NewCo became much clearer to me. OldCo got started at a different point in time with a completely different thesis than NewCo. It engages with customers in a completely different way […] Because of this focus, OldCo is able to offer an outstanding value proposition to customers but only on a very narrow set of use-cases and — in truth — only to a very narrow set of customers who need something very specific.”

  • Providing Insight Through Comparison:

    • "Competitive context helps. Ironically, trying to go deep on OldCo was the best way to really understand NewCo. That conversation allowed me both to understand how and why OldCo had been so successful and why NewCo was really operating in a totally different (and, I think, potentially more interesting) category... “

  • Actionable Advice:

    • “… when telling your story to investors (or anyone), take a moment to tell the story of your biggest competitor or the incumbent you are trying to disrupt. Crucially, do it completely from their perspective. Show respect for what they have achieved and show an understanding of how they got to where they are. […] and that story will help showcase and sharpen your industry expertise. Once you’ve set the stage in this way, focus on how you can position your company as potentially very interesting even in light of the competitive landscape you are operating within. If you do this wisely and well, it should help you to better tell your own story — and everyone listening will be smarter for it.”

Pre-Seed is Still Hot 

Why Read (3 minutes):

  • Understand the rising availability pre-seed funding in the current market.

Author:

  • Eze Vidra, Managing Partner at Remagine Ventures

Link: 

Key Concepts and Tactics:

  • Trend Observation in Pre-seed Funding:

    • "Pre-seed rounds accounted for 14% of all seed stage deals in 2023, up from just 5% in 2020 according to Pitchbook data and I predict it will be even higher in 2024."

  • Impact of Market Dynamics on Funding:

    • "Data by Carta (mostly US companies) reveals that although on average startups saw a 50% reduction in funding in 2023... pre-seed funding rounds rose by 51%!"

  • Defining the Pre-seed Round:

    • "Pre-seed round tends to be the first ‘institutional’ round of funding in a startup... According to Carta, Pre-seed means 'companies raising less than $1 million on SAFEs who have not raised any priced equity'."

  • Comparative Analysis of Pre-seed and Seed Rounds:

    • "Naturally, I asked ChatGPT to outline the differences between a pre-seed and seed round... Pre-seed tends to be about developing an MVP and generating early traction. Seed is about showing initial product market fit."

  • Factors Driving the Growth of Pre-seed Rounds:

    • "Explosion of Micro funds... Everyone moved to earlier stage... Lower valuations and follow on valuation sensitivity... Technology makes it possible to do more with less."

  • Advice for Founders Approaching Pre-seed VCs:

    • "Founding team... Market / opportunity size... Product/ tech/ insight – In many cases, pre-seed startups might already have a minimal viable product or at least some initial functionality to demonstrate potential."

  • Strategic Shifts and Opportunities in Startup Financing:

    • "In summary, the return of the pre-seed round in 2024 highlights a strategic shift in the startup ecosystem towards earlier engagement with investors... At the risk of sounding cliche, there’s never been a better time to be a startup founder."

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