What’s great about your product or service? Is it unique? What need is it meeting in the market?
I invariably start the conversation on the product or service. Ideally there’s a demo to show me in the first meeting as I like to experience something right off the bat. Tern PLC doesn’t invest pre-product therefore it’s a warning signal if I can’t see the product or service in action.
I will ask about USPs and how a product or service meets a need in the market. I’ll also ask about product security, If you can’t answer these questions well and fully, then chances of a second meeting are poor.
What is the size of your Total Addressable Market?
You need to show how much market share you can potentially capture. If you can talk in terms of age, geographics, psychographics, pain points, drivers then that’s really helpful to paint a picture. Be realistic, do your research and clearly show how you’ve come to the size calculation.
What are barriers to entry?
Can competitors replicate what you are doing or replicate your idea? You need to demonstrate that it’s not easy to compete with you directly. Being first to market with aggressive marketing as your ally is a defensible strategy if you make sure you grow your customer base quickly and establish brand loyalty, but it’s not an easy one. I’m much more satisfied if your company has intellectual property and patents established or pending.
Who are your competitors?
Be ready to talk about your direct competition and how you compare. If you have no direct competition then who are the companies that satisfy the same customer need? Make sure you have an answer and have done your research, before an investor tells you about one during your pitch. Tern specialises in IoT investments, so though we don’t have encyclopedic knowledge of the market, we can certainly talk about the landscape including major players and new entrants.
What keeps you up at night?
I think this is a great question to discover how as an entrepreneur you think and prioritise. There’s no right or wrong answer here and often entrepreneurs will laugh and ask, ‘where do I start’. Sometimes the answer given will play right into Tern’s sweet spot of experience, and right away I think we can help.