Balancing customer-focused messaging with investor-focused messaging (Oversubscribed Weekly #7)

The theme of this week’s newsletter is balancing customer-focused messaging with investor-focused messaging.

You’ll often hear about how investors like to see big, growing markets. While this is true, there’s a prerequisite that a lot of founders overlook: before looking at market size, investors need to be convinced that you have a compelling solution to a clear customer need.

We’ve seen pitches that do an excellent job painting a picture of a big market, but then fall flat when it comes to communicating the need and solution from a customer’s point of view. If an investor doesn’t think that people will buy your product, it doesn’t matter how big your market is or how fast it’s growing.

Jenny Gyllander from Backed VC runs an instagram account called @thingtesting, where she reviews VC-backed products (it’s a good follow). 

Her posts review products from a customer perspective and a VC perspective, which is a clever glimpse into how investors think about potential investments. Read through some posts to see the difference between the customer narrative (why she likes the product as a customer) and the investor narrative (why she likes it as an investment). Writing these concise narratives yourself can be a really helpful exercise. 

So how can you use this understanding to your advantage? Here are just a few practical ways that understanding the dichotomy between customer and investor can help with fundraising.

• Target investors who have experienced the need that you’re solving for – it’ll result in better conversations.
• Make sure that all customer-facing collateral (e.g. your website) has customer-facing messaging. Writing content for your website with investors in mind hurts more than it helps. It shows that you care more about your investors than customers, or that you don’t understand how to talk to your customers (neither are good things). Investors know that they’ll eventually hear the investor pitch, so when checking out your website, they’re trying to put themselves in your customer’s shoes. Make that easy for them.
• If an investor is not convinced that you’re solving a real customer need in a compelling way, then move on. No matter what else you show them, they won’t come around even if they’re not saying “no” yet.

All that being said, the below comic strip, created by Robert von Goeben and Kathryn Siegler in 1997(!) as part of The VC Comic series, reminds us that the #1 factor in fundraising success has long been – and will always be – generating FOMO.

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