Every new product or company needs to go through some phase of fund acquisition. New companies need funding from investors to get initial projects off the ground. Research efforts similarly require grant funding. Without these startup funds, even the most exciting ideas are doomed to fail. This can be perceived as a necessary evil in the realm of new projects. Many would argue all projects deserve a chance for the sake of science and progress. Funding acquisition acts as a form of natural selection to projects and ideas.
In Part 1 of this series, “Selling Ambition,” I talked about what makes certain ideas exciting or boring. Successful projects, experiments, or startup companies all focus on clear and observable problem statements. However, an interesting idea with a good problem statement is not the only thing necessary to get a project off the ground. Plenty of good ideas have failed, and just as many lackluster ideas have succeeded. Ambition is important to sell an idea or project, but just as important is proving the idea has the ability to walk. In this installment of the series, I would like to discuss examples of strong vs. immature pitches I’ve come across.
The customer is always right
Equally important to what your problem statement addresses is who the stated problem affects. Let’s return to the example of the cure to cancer for a moment. You could argue everyone is the customer here. Patients with cancer, family members, health care providers, insurance companies, and pharmaceutical groups all stand to make or lose money from a realistic cure to cancer. However, the majority of projects do not have a one-size-fits-all.
Let’s now use the infamous Scrub Daddy as an example. For those of you who are unfamiliar, the Scrub Daddy is a kitchen sponge with a smiley face on it that has become one of the most successful products to come out of the TV show Shark Tank. The founder, Aaron Krause, originally conceived of his product as a more efficient sponge for mechanics. He designed the sponge specifically for cleaning grease off hands. Unfortunately, mechanics had no interest in the specialized sponge, and he assumed the product was dead. One day, he was using the sponges to clean objects around his house and found they worked very well on dishes. This prompted him to sell them as a dish-cleaning solution instead, and the rest was history. Nothing changed about the sponge itself. What changed was the customer he was focusing on and how he phrased the problem he was solving.
An idea can be exciting in theory. If no one is going to benefit from the solution, then it only remains theoretically exciting. Talking with potential customers is an essential part to preparing your idea for investors. The National Science Foundation I-Corp program, which is dedicated to bringing science ideas to market, focuses primarily on customer discovery. Ideas born in a research setting are most often victim to failing customer interviews. I’ve particularly failed at this myself: I was pursuing a startup idea for a research tool I believed would simplify drug screening for clinical trials. I saved myself time from diving too deep into a full company because I went and talked to who I thought my customers were and found they did not have the problem I was trying to solve. I realized the idea needed way more work before anyone would be willing to buy it. I will go into more detail on this in my final installment of this series, “Settling for Success.”
Investors in new startup companies highly value clear customer identification. Who is going to buy your product? How much are they willing to pay for it? What are they currently paying for that you are trying to replace? This level of research is a minimum requirement to proving your product or idea can make money.
Recognize your audience
Identifying your customer is one thing. Identifying your audience is different. The way you describe ideas changes based on who you pitching. For research grants, it’s relatively static. Funding institutions generally look for a specific type of language when pitching scientific ideas. They want evidence of strong literature search followed by clear methodology and hypotheses. The scientific method, as described by Sir Francis Bacon back in the 1600s, will never fail you here. If you’re talking to a room of investors using the scientific method, the Bacon is burning and everyone leaves the room hungry.
You can give the same pitch to 100 different people and they will all have different takeaways from your conversation. I’ve had the privilege of seeing many different startup pitches in association with my university’s entrepreneurial community. These students range from undergrads to experienced scientists in fields ranging from quantum computing to chemical engineering to business. The first time I see these groups pitch, they are often focused on convincing people within their specialty that their project is exciting. In a diverse room of knowledge, these pitches fall flat immediately. With time and effort, I’ve seen these same groups come back and pitch the same idea but with much more efficiency. I distinctly remember a few projects where, almost two years later, it became clear what they were trying to solve.
The same goes for rooms of investors. Their language is usually money first. If you can, try to research the people who will be in the room for the pitch. What kinds of projects have they funded before, and what made those fail or succeed? Showing you’re putting an effort into understanding your audience goes a long way. Despite my comment on the standardization of grant applications, this also applies here. To be discussed further in Part 3, “Acknowledging your thoughts,” recognizing the hat you wear is necessary in this process as well. Showing your potential investors you know what you’re trying to accomplish tells them your project has real potential.
For more perspectives on communicating ideas, check out Dr. Sagan Legget’s discussion, “The Art of Science Communication”.
The Art of Science Communication
“Why waste time say lot word when few word do trick?” - Kevin Malone, The Office
Build a strong team
One aspect of pitching a project that is often forgotten is who will actually be doing the work. Of course, you, the inventor or researcher who is pitching the idea, will be part of the team. Doing any project alone can be challenging. Investors recognize this and will be less likely to trust that you’ll be able to complete anything.
You need to show you have a team working alongside you with the right expertise to build the project into a success. If you’re building a rocket to the moon, for example, an investor will want to see that you have a rocket scientist on your team. While technical expertise is important, equally vital is business and logistics expertise. The classic structure with roles like chief executive, operating, and financial officers (CEO, COO, and CFO) can be very appealing to investors in startups. If these individuals have key experience in other companies, that’s an even better bet for you and your investor. At higher levels, like venture capital, they may even request you hire one of their people in these positions.
In a research setting, you have to prove you have the right expertise to get the project done. If you or your lab doesn’t have the right expertise, it is worthwhile to seek collaborators on grants or projects who can fill these gaps.
One caveat to consider: pulling from the same pool of people can sometimes raise red flags. If everyone on your team comes from the same institution and is roughly the same age, the project can come across as a friend group first and not a serious company. The same can be said for including your research advisor on your team. I’ve spoken with investors who have been turned off by projects coming directly out of research groups. They don’t want a company that is just an extension of a lab for the purposes of doing more research. What they want is a group focused on and capable of growing their investment.
Please don’t lie
Like my mom always says, “the truth shall set you free.” Smart researchers and investors can usually smell when something is fishy. You don’t necessarily have to divulge every aspect of your operations. Keeping some things close to your chest for the sake of competitive advantage or intellectual property can be in your best interest. Do this only if it is necessary though. People’s time is valuable. Providing them with a clear overview of your project and team allows them to make a more informed assessment.
Pitching your idea to people ultimately takes a lot of time and practice. Taking the time to direct the problem statement towards a clear customer is necessary. Then you can start to discuss your idea. In the next installment of this series, I will talk in more detail about the different ways we think about problems and projects. Specifically, what will we wear when we go to work?