At one of our recent Office Hours, we got the question (for a medtech hardware device startup), how do I convince investors to like my business model? This is a common theme I hear from entrepreneurs.
Find an investor that matches your model
If you have a specific business model (i.e. med device), trying to force your model on an investor that invests in different models (i.e. consumer, B2B SaaS) will be difficult. You will spend a lot of time trying to convince them of something they don’t understand and/or is outside their scope. Instead, start by focusing on investors who already invest in similar business models. You won’t have to explain to them basic things about hardware, FDA clearance, etc. At the early stage, this can often mean a retired industry exec/angel who already understands the market and problem.
Build the relationship over time
As we always say, it is about lines not dots. Build relationships with investors before you want to raise money. Ask for feedback. Consistently send weekly updates. Show progress. All of these things can help you and the investor be comfortable working with each other before it is time to raise.
Prove out more early
If you are struggling to convince investors, how can you prove more traction early? There are ways to do this pre-revenue. You can get design partners to pay to build it with you. Make sure your level of traction matches what you are trying to raise.
So rather than trying to teach investors a different model, focus on investors who already understand your space and are a good fit.