The Competition Slide

Increasingly, I’ve seen founders bypass the competition slide and hesitate to make it a central part of their presentation. I’m sorry, but it’s too significant for the long term future of the business to gloss over. Investors need to understand who you compete with now and who you might compete with in the future. More importantly, consider it another opportunity to demonstrate your understanding of the customers’ needs and market dynamics. Since no investor will understand the market as well as you do, (since it’s your job to understand it more deeply than anyone else in the world) you get the opportunity to educate potential investors and build the market context which will affect their investment decision.

There are many potential ways to approach the slide, but the two standard ways both work well. In fact, I’d recommend you do both for yourself as part of a product marketing exercise (As another thought exercise, it would be interesting to think about how your competitors would create such charts as well):

• 2 x 2 matrix- pick the axis that seems most relevant for actually understanding the market. It could be company size, scale of data assets, ease of deployment, need for services versus simply software, ease of use. You get to decide, but it will help frame where and how you win in the market.
• Harvey Balls chart- you see these in consumer reports with balls that are fully, partially, or not at all filled in. Once again, you choose which categories to include. It gives a detailed, feature by feature report on how you compare to your competitors.

The most uncomfortable question can be about the adjacent, bigger companies that might come into your product’s market. On one hand, “It’s only software and anyone can write anything.” Big companies have brands, distribution and existing customer bases. On the other hand, small focused companies often execute bigger companies. Your level of customer understanding and unique approach to the market are big parts of why an investor will back your company. Two tips: 1) Point out why it isn’t in the mindset or strategy of the incumbents to enter the market, or that it is too painful or expensive to follow you into the new segment you’ve created, and 2) Recognize that big companies that might subsequently want to enter a new market are potential acquirers. You can plan this to your advantage if done right.

Knowing your audience and their perspective will help you create a more effective fundraising presentation. As you create your presentation, I challenge you to dig deeper and ask yourself the harder questions to further demonstrate your thought processes of how the pieces of your business fit together.

​Relevant links:

https://en.wikipedia.org/wiki/Harvey_Balls

http://blogs.wsj.com/accelerators/2014/05/30/weekend-read-the-missing-slide-in-a-startup-venture-pitch/

Read A Closer Look at a Startup Venture Presentation Part 1: The Use of Proceeds Slide is Dead here and Part 2: All TAM Slides are BS here.