During the last two months, I have had the pleasure of supporting 40 top African startups as they prepare to pitch at DEMO Africa. We are now winding up an eight-week virtual mentoring program with weekly educational workshops and one-on-one sessions to work on their pitches.
The main goal of the event is to showcase the technology through a “demo,” with the app or software officially launching on stage. Each company has six minutes to explain its solution and show the user experience, design, process flows, etc. The great ones are able to show off their apps while also giving the highlights of an investor pitch. That is extremely hard to do without having a compelling story to tell about how painful the problem is that you are uniquely positioned to solve. But how can they prove the market will bite before anything has been launched?
Showing traction can be done in many ways: customer acquisition, revenue, strategic partnerships, letters of intent — it’s all about showing that someone else is taking a chance on you or that you have been able to scale and go from step A to B and beyond. You don’t have to wait until you offer a product to pound the pavement (or email boxes) to get those early adopters or first customers on board.
Strategic partnerships are a place to start. Who would be a great value-added partner to help endorse your business, give you guidance and feedback, and have a longer-term vision for how the relationship may evolve? Find a company that either is already a thought leader or has some other attribute that gets them attention, such as a huge client base, international reach or a well-known brand. If you can persuade that company to risk its brand equity by taking a chance on you, others will follow.
The strategic partnership may be a small, closed pilot study in one store, or even just using the partner’s existing data to show the accuracy of your algorithm, but the hope is that you can use the company as a reference. It is a win-win if it works — you can name drop and the company will look great doing something cutting edge. Of course, you are taking a risk in the announcement if the partner company decides not to move forward. Even if the pilot is a huge success, the corporation may find reasons not to move forward and then you have to tactfully explain why it is no longer a client. Another major challenge will be in maneuvering the company — unlike your startup, corporations rarely move quickly. I have seen agreements take more than 18 months to close even after initial meetings were high energy and both parties wanted a partnership.
Startups with a physical product have a huge advantage in being able to make sales months before needing to deliver, thanks to the crowdfunding movement. We are excited to pay today for a new gadget or gizmo that won’t be delivered for six months. With those early adopters on board, no one can deny that you have found a hook.
Gathering survey data from a large number of potential users with positive responses to your solution is inexpensive to collect, but make sure your data collection methodology is clean, your questions tested for reliability, and your findings valid. Another means of showing your product-market fit is in engaging potential customers or respected experts to advise on the development of your company. If you can talk about the focus groups you hosted with industry veterans and potential users generating a positive response, that is one more plus. If an investor with industry knowledge comes on board, that is also something to celebrate and promote.
Show your hustle through building relationships and challenging your assumptions early and often with potential customers and partners. Yes, some may not get it, but then listen to why they don’t. Your product may be great, but your pitch may need some work. That is the beautiful thing about a demo — it’s about your product. Ditch your deck and tell your story visually through your customer’s experience.
I know there will be cheering at DEMO Africa in Nigeria when what seems to be a simple website company shares the partnerships that it has cultivated pre-launch, and then the startup will be tracked like big game.
Susan Amat is the CEO and Founder of Venture Hive, an entrepreneurship education company that runs and accelerator and incubator in downtown Miami and other programs across the globe. Follow her on Twitter at @SusanAmat.