The Surest Way to Get Capital for Your Startup (and Why Your Business May Never Take-Off Without It)

It’s a dog-eat-dog world out there for startup founders, but if you understand this one integral rule of business development, you’ll be much more likely to get capital for your startup, catch the eye of high-rolling investors, and get a leg up on your competition.

Let’s face it; all startups need money.

To make your ideas into products, and your products into profit, you need to get your hands on some moolah. No matter how you look at business, money is your ultimate boss, and there are companies out there whose entire business model is built upon giving you the capital you need.

You might be thinking: sure, maybe there’s big money out there for new businesses, but how do I get it?
How do I attract investors and ultimately obtain capital?

The answer is simple, but it’s NOT by having a great product.

There are loads of startup founders out there, and most of them have game-changing ideas coupled with fantastically marketable products. The startup scene is full of intensely smart people; all of them are salivating for the same success story, and each of them promises a better product than the next entrepreneur.

So how do you compete with all these budding companies?

Easy…

To Get Capital, YOU STAND OUT!

To get attention, you don’t just have to be better, you have to be different, too. You have to be excitingly distinct, and you have to be loud about it, which means, you have to constantly and enthusiastically share the compelling traits that make you/your business/your product noteworthy.

Here is a quick example of what NOT to say:

“We have great service!”

Hmmm…

That is not a very loud differentiator, is it? In fact, it’s not really a differentiator at all. It’s boring and, in reality, every business should offer great service, right? So, even if you shout that from the rooftops, or howl it from highest mountain, no one will hear you.

No one will be converted by a lackluster claim that you have great service. Instead, they’ll hear, “notice my startup for no particular reason!” And then they’ll think something like… “hmm… don’t care.”

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So—  d i f f e r e n t i a t i o n  is important!

Getting attention and, ultimately, getting cash from investors is hard. You have to do a lot of things right, but beyond having a good app or a good idea, you have to surpass a threshold of expected excellence and genuinely separate yourself from the competition.

Not surprisingly, if you can’t differentiate your business, it’s not likely to get very far.

Not only is differentiation crucial to securing capital, it’s also critical to gaining customers. If your startup doesn’t clearly communicate to an investor that it has a surefire future, and that it alone can capture the hearts (and wallets) of the masses, those investors are not likely to hand over a chunk of hard-earned cash.

And even if you do get lucky, without a key differentiator, luck, like funding, will run out…

A solid differentiator will be the foundation of your business and, because it will attract customers, it will also attract VCs.

Here are some more reasons why you must set yourself apart…

In almost every market, there are multiple companies offering identical products or services.

The companies that sell those products or services most successfully, have significant differentiators (and you know who they are because they declare and defend the qualities that differentiate them). Your potential customers are wondering all the time…

“why you?”

Do you know why a consumer should choose your product or service over anyone else’s?
Do you know why an investor should help you instead of any other business with a similar pitch?

If you do, you’re ahead of the curve. Take that knowledge and refine it into a solid, measurable differentiator.

If you don’t know why an investor should choose you over anyone else, there is literally no better time to start soul-searching with your startup. Because you are different! But if you can’t show an investor why, she sure ain’t gonna make it rain funding.

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To get VCs to lay down their money, here are some things to think about…

Can I have more than one differentiator?

Of course! It’s great to be special for more than one reason. The more positive and profound your differentiators, the more likely you are to create a powerful brand, get capital, and gain enthusiastic brand evangelists.

Your differentiators should be…

Unique
– the sole example of [benefit] in your [market].
– unequaled in type, characteristics, or performance

Desirable
– necessary to the solution of a problem
– worth having or wanting, and especially worth paying for

*Defendable
– upheld by your business model and practices
– supported by behavioral proofs in the face of criticism

*Important Note: Something that is defendable should also be the truth. DO NOT make claims that you cannot fulfil. When companies break promises to their consumers, it breaches trust and those consumers feel a lot like they’ve been lied to.

For example, if you are an ecommerce store that claims, “we ship every order same-day,” and then you don’t ship every order same-day, your differentiator is not true and not defendable.

Here’s an example of a solid differentiator…

“At DevSquad, we only hire senior developers, and all our developers work in pairs to maximize production.”

That differentiating statement meets all three criteria. Here’s why…

  1. It’s rare to have a dev team built entirely of senior engineers. Many dev shops are built primarily of junior staff. This helps junior developers gain work experience, but it doesn’t give the consumer the greatest bang for their buck. By hiring only senior developers, DevSquad is unique.
  2. Senior developers have more experience, and Devsquad pairs them because two heads are better than one. That means, a DevSquad team can make better code faster, which is both desirable and worth paying for.
  3. Here’s some social proof: real testimonials of DevSquad’s work

What else does a strong differentiator do?

To use the above example, in meeting all three criteria, DevSquad’s differentiator tells potential clients important things about our business:

It shows DevSquad cares about the quality of work produced in our shop. That matters A LOT because, incidentally, that work is our clients’ livelihood.

And it shows that DevSquad gathers and allocates the best possible resources towards our work. Potential clients sense that instantly because DevSquad serves it on a strong, true differentiator.

You see, if you’re just like any other business in your market, you’re probably unmemorable and, worse yet, you might be unnecessary. That’s a dagger to the bleeding heart of any startup.

So don’t settle for being typical, or even for being good. To quote Jim Collins, a business consultant, author, and lecturer with tons of other cred, “good is the enemy of great.”

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Let that sink in a moment…

Investors and consumers already expect your product to be good. They already expect that your service is good, and that your prices are good, too. If you want to gain exposure, interest, trust, and funding you have to show everyone something different.

Find your differentiator and express it in everything do. Every interaction is an opportunity to share your specialness and, more importantly, to prove it. Cultivate your differentiator, bolster it, back it, demonstrate it, and display it everywhere, to everyone.

If you want to build an unmistakable business, focus on the traits that separate you from others like you in your market. Answer “why you” better than your competitors, and get a leg up on all the other “dogs” out there. Once you solidify it, your differentiator will be your fast-pass to funding, customer adoption, profitability, and market leadership.

So you want to get capital? Get creative! Find a pain point and satisfy it unlike anyone else.

Tell us what makes you unique! Share your thoughts in the comments section below!

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Mallory

Mallory Merrill is product manager and editorial director for DevSquad, a true Agile software development company in Salt Lake City, Utah. Working for more than a decade in the technical world of content- and software-writers, Mallory aims to bridge the gap between code and copy. Her work is driven by a passion for language, and the belief that effective communication is the backbone of all healthy businesses.

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