Last month we hosted our 12th I Am A Founder webinar, with guests Joe Pelissier and Phil Gray who shared their insights on how market research and competitor analysis can help businesses gain investors’ confidence.
You can watch the full webinar on YouTube, and we would recommend doing so to all Founders approaching their next funding round. Market research and competitor analysis can make a radical difference – especially for early stage businesses – when pitching your business to investors.
Our guest Phil Gray, is a market research specialist and has worked as an Insights Partner with the likes of Honda, AddVantage Strategy and Nominet UK.
With his company Constellation-I, he helps organisations to reduce the risk and increase the confidence in decision-making with expert independent evidence-based Research, Insight and Strategy by unlocking the value in understanding New Product & Service Ideas, Stakeholder Motivations and Brand Engagement.
Phil summarised the key takeaways from our webinar below.
Why should you simplify value propositions?
Over time, we have seen how difficult it is to write a clear, simple proposition and yet it is the fundamental frame of reference or anchor point for your audience:
- According to behavioural science, our brains prefer to quickly process information
- Successful propositions are ones that are distilled right down to a clear central offer
- The three basic steps to developing successful propositions are:
- Recognise what problem(s) you are solving
- Understand how best to simplify the solution(s)
- Test and validate the proposed solution(s), i.e. a ‘proof of concept’
Why is market validation important?
Market validation builds evidence to enable Founders to engage with Investors in ‘real world’ fact-based conversations reducing risk and increasing confidence in decisions:
- Typically, market maps presented in business plans are not always validated and are often highly subjective, i.e. the opinion of one or two people in the organisation
- Start by understanding your market through strategic frameworks such as Business Model Canvas and Competitive Analysis, e.g. What defines the market place? What is the competitive landscape? Where might you fit in to it with your proposition? Is the opportunity where you think it is or actually somewhere else?
- Research can help to support and validate assumptions, and to debunk myths too
What role does primary and secondary research play?
‘Primary Research’ is contemporary data collected directly through quantitative surveys and qualitative feedback, e.g. polls, questionnaires, interviews and focus groups.
‘Secondary Research’ is public domain or paid for desk research, often based upon pre-existing primary data, including opinion pieces and trend analysis, obtained from trusted sources such as Companies House, ONS, Statista, Gartner. IRI, Euromonitor, etc.
Bear in mind, it is the Investor’s job to assess risk and reward – ultimately, this leads to the terms you’re going to receive around valuation and investment during funding rounds:
- Investors demand substantiation of Founder’s claims, e.g. Is there a problem to solve? Why now is the time? What size is the opportunity? Who is the competition? What are the alternative solutions?
- Whilst secondary research can underpin business plans, what separates the best pitches are those who’ve undertaken primary research, e.g. to understand the size and profile of their audience, their pain points, their attitudes/ behaviours, and what motivates them
- Additionally, research can help to identify and test multiple hypotheses, e.g. the ideal combination of features and benefits that delivers a competitive advantage, and that are most likely to drive future consideration and/ or purchase
Successful value propositions are proven: market validation provides comfort to both Investors and Founders.
Winning pitch decks are data-driven: helping both Investors and Founders to reduce risk and increase confidence in decisions. © Constellation-I Ltd. – Aug. 2020 | How to Boost Investor Confidence with Market Research and Competitor Analysis 3