Don’t believe the hype. Investors don’t.

You’ve got a cleantech startup, complete with IP and a business plan. And you’re looking for investor dollars to get you off the ground. Welcome to the fray.

We all know that funding is tight these days; VCs are extremely careful with their money, and competition for those dollars is fierce. It’s easy to think that the best way to capture investor attention is by positioning your offering as simply the newest-best-most-innovative thing to come along, with no competitors and an enormous addressable market.

But you wouldn’t be doing yourself, or your company, any favors.

Innovation is exciting. Invention is exciting. But more exciting to an investor? A solid business model, clear intellectual property, a differentiated offering, an experienced team, and a market that’s primed to buy. The business model, IP, team, and market components of your story are fairly objective data. It’s the differentiation piece that can be tough to uncover and articulate. We’ve talked about the four ways to differentiate. Now, let’s take a look at how to articulate your differentiators to best appeal to investors.

1. Recognize your competitors. If you think you don’t have any, you’re probably wrong. If you’re not wrong, ask yourself why you’re alone in the field. It could be that your idea isn’t as marketable as you thought. What makes for a great invention doesn’t always make for great business.

2. Identify your differentiators. List the aspects of your product or business model that make it different from your competitors’ – both the positive and the negative. You’re not going for spin here; you’re going for truth.

3. Decide which differentiators you will emphasize. We suggest, if you’re pitching to investors, that you choose those that will best support clear return on investment dollars.

4. Now, the chart. Many companies steer clear of a slide that outlines competitors. We say: don’t. Make sure you include one in your pitch. Magic quadrants are well understood. Another, simple, approach is a table that lists your competitors by name. In one column, highlight what makes you better than them (your differentiators). In another, highlight where you might fall short.

It’s not always easy, but we’ve found that being honest about what does (or does not) make you different can actually make all the difference to your perceived credibility. And when you’re asking for a check – no matter how large or small – that’s crucial.

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