Once you are on the commercialization path, it is never too early to invest time in a thorough analysis of the competitiveness of your technology and product. Tools for such an exercise are reviewed in other sections of this website, and include the analysis of product Features, Advantages and Benefits (FAB) and the development of a Competitive Matrix. Having completed these analyses with input from potential customers, the documents can be used as key elements of support in investor discussions.
When compared to your competition, the sum of your product benefits (along with other company advantages you may possess) contribute to your overall “competitive advantage”, another term you may hear from investors. But, more often, you will be asked to describe your “Value Proposition”.
Value Proposition refers to a statement that you believe would summarize why your targeted customers would buy your product...
The statement must identify succinctly the advantages and benefits customers would receive from its use, compared to competitors.
The FAB Analysis and Competitive Matrix could be very helpful in constructing (and defending) a statement of this nature. Continuing with the theoretical NewDx™ Diagnostic Test System concept, the following is an example of a Value Proposition Statement.
NewDx™ Value Proposition:
The hand-held, wireless NewDx™ Diagnostic Test System provides the most extensive menu of tests available in an easy-to-use format that is best suited among all competing products for use by lesser-trained personnel in field-oriented testing environments (where power resources are limited and real-time connectivity could be critical for remote interpretation of results).
Professional investors will pay attention to (and will respect) a well-thought-out and supportable “Value Proposition”. Conversely, if your analysis turns up design weaknesses or misunderstandings of customer needs or habits, then best to know it early and make course corrections ─ before you waste development time and investment money!
You should now have the background information to approach the next significant question you will hear from prospective investors:
What is the “addressable” market opportunity for your product concept?