Pitching an idea to an investor is not just about great storytelling; it’s about doing your homework and knowing every question you might be asked inside and out. In the first of our series for the MedTech Roadmap, we asked co-founder Diana Saraceni and Principal investor Barbara Castellano, from Milan-based medical VC firm Panakes Partners about the five most common mistakes startups make during a pitch and how to avoid them
It might sound obvious, but it cannot be overemphasised. ‘You would be surprised at how many startups believe they’ve identified their target market but fail to figure out the final positioning of the product and end up considering a much bigger or smaller market,’ Saraceni says.
Research your market well and prepare detailed answers to each of the following questions: Who is your target user (ie healthcare provider and patient)? Who are your competitors in each market? What is your competitive advantage (ie the unmet need and how, if at all, you will be able to demonstrate it to the scientific community)? How will you bring value to the market’s health system?
‘It’s never good to remain speechless in front of a question about something that should have been considered with basic sector expertise,’ Saraceni says. Find out as much as you can about the investor you will be pitching to and prepare your pitch accordingly. They may or may bot be experts on the topic so the presentation should be tailored to their particular level of understanding.
Do the presentation several times with sector professionals that could ask you all the relevant questions and suggest the best ways to answer each of these questions.
‘Hiding some weaknesses at an early stage is probably the best way to make your potential investor angry later. They’ll probably find out during due diligence every problem that will convince them not to invest,’ Saraceni warns.
Revealing all shortcomings early on could avoid wasting both of your time and might even result in the investor deciding to help with the problem and invest anyway, since he/she might be more collaborative at that stage.
‘Having the right team is half the success,’ according to Castellano. An investor can instantly tell if your team doesn’t have the right chemistry or motivation to work together.
Invest time in developing your dream team. Make sure you have a technical expert who is able to show the feasibility of the technology. It’s also crucial to have a regulatory and quality expert to back you up.
‘We’ve seen many startups approach our firm without any prior knowledge about our business and our interests,’ says Castellano. It is very important to make sure your goals and strategies match that of the investor.
Target investors in your local market first. Remember, VCs work in syndicates so they will probably spread the word and put you in contact with other firms for your next funding round.
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