You will increase the attractiveness of your startup to investors if you can show a competitive barrier that will help you defend your market position.

Investors Like Backing Businesses that Are Defensible

Investors worry that your business may be overrun by well-funded copycats at the first sign of success. Protectable intellectual property, network effects, exclusive partner agreements, or products or services that are hard to replicate can all be effective barriers to entry that protect you from fast-acting competitors.
– The Startup Daily

The road to success will be long and winding. The original business plan will probably be thrown out—sometimes multiple times.

Solving the problem in the best possible way often appears to be in conflict with finding the most profitable business plan, especially in the early stages.

Entrepreneurs Who Are Committed to a Mission Beyond Profits Are More Likely to Succeed

An entrepreneur who has an unwavering committed to the original plan is likely to fail, and an entrepreneur who chooses the most profitable business plan is likely fail. But an entrepreneur who is committed to solving the problem in the best possible way just might find the right path to success.

Investors are on the lookout for signs that the entrepreneur can be flexible enough to adapt their plan to new information and changing circumstances, but that their commitment to the larger mission cannot be shaken.
– The Startup Daily

The risks for an early-stage investor fall into three main categories. The people, the product, and the market. Getting all three right is necessary to build a successful company.

Most entrepreneurs approach investors as though the product is the most important thing. But from the investor’s perspective, product or market failures are the easiest to recover from.

The Entrepreneur Is the Greatest Risk for the Investor

The idea is probably not right the first time around anyway. The right founders can adapt their products and find new markets. But if the founders are not capable of executing on the idea, there is very little the investors can do.

Investors will use discussions about the product and the market to learn as much as they can about the entrepreneur. Are they passionate, intelligent, tenacious? Are they teachable and able to admit when they don’t know the answer to something?

If the rules of real estate are “location, location, location” then rules of early-stage investing are “people, people, people.”
– The Startup Daily

If you want to get in front of venture capitalists to pitch your startup and ask for funding, the one thing you should not do is cold-call them. VCs are very protective of their time. Cold-calling or emailing identifies you as an outsider who doesn’t understand how their process works, and your attempts are likely to be ignored.

The Best Way to Get a VC’s Attention is to Get an Introduction from a Mutual Acquaintance

Do your homework on the investors you would like a meeting with. VCs are master networkers. If you can’t find a mutual acquaintance who can make the introduction and vouch for you, then make one. With social media tools like LinkedIn, a determined and resourceful entrepreneur should be able to find a way into the VC’s network.

Many VC’s see this as the first test to separate the doers from the dreamers. If an entrepreneur can’t find a way to get to the VC, how can they successfully get to customers?
– The Startup Daily

Some customers place a high value on gaining early access to a product, while others will only buy at a lower price, and are willing to wait to do so. Media companies often use release windows to maximize profits across this urgency spectrum.

Release Windows Allow You to Vary Pricing Based on the Customer’s Sense of Urgency

The more expensive—and higher margin—hardcover version of a book is released six months to a year before the lower priced paperback version. Similar tactics are used for Movies. Each drop in price entices a new market segment to buy.

Taking advantage of release windows isn’t limited to media companies.
– The Startup Daily

Traditional economics teach that demand increases as prices decrease. But this linear model falls apart as prices reach zero.

Charging anything at all—even just one cent—is enough to stop the vast majority of potential consumers in their tracks.

There are two reasons for this. First, there is the friction and hassle associated with making a payment. Second, people have an irrational fear of loss. They will avoid decisions altogether that may result in a loss, even if it’s only a penny.

Giving away your product for free bypasses this decision making process and removes the perceived risk.

The Demand for a Product at a Price of Zero is Many Times Greater than the Demand at Even a Very Low Price

For digital goods, where the cost of distribution is approaching zero, this creates two separate markets. One is free, the other is “any other price.” Those providing goods for free will always have the attention of a much larger group of consumers.

The freemium model of offering a premium upgrade path to a fraction of your users in exchange for more advanced features is one reaction to these shifting economic forces.

The vast majority of these users may be getting a free ride. But as long as Moore’s law continues to hold, it doesn’t matter. As the costs associated with serving these free users go down, it becomes increasingly worthwhile to cover them in exchange for the attention of the fraction of those users who may upgrade.
– The Startup Daily

In Crossing the Chasm, the classic of marketing high tech products, Geoffrey Moore identifies several distinct groups of customers that a product must appeal to as it moves through the technology adoption lifecycle. Each group of customers has its own needs, desires, and expectations with regard to quality, service, and even pricing.

Visionary early-adopters are the least price-sensitive group. They are focused on the value and the edge your product will give them over their competitors. They expect the product to be expensive because it limits their competitors access to the same advantage, and ensures the innovator will have the extra margins they need to provide a high level of service.

Pragmatic customers, the elusive key to the mainstream markets, want to keep their total cost of ownership down. They have learned that the best way to do this is to back the market leader.

To Be Perceived as the Market Leader, Your Prices Should Reflect the Customer’s Expectations for the Market Leader

Pragmatic customers expect to pay a premium—as much as 30% over the price of the nearest competition—to buy from the market leader.

If you attempting to cross the chasm, be sure that your prices meet the expectations of the customer groups you are currently targeting.
– The Starup Daily

Different customers are willing to pay different prices for the same product. Companies that set only one price are leaving money on the table from those customers who were willing to pay more, while simultaneously loosing out on customers who would have bought if only the price was lower.

The solution isn’t either/or, it’s both.

Use Differential Pricing to Charge Each Customer Segment What they Are Willing to Pay

The least price sensitive customers can be offered higher levels of service, early access, or other conveniences in exchange for paying premium prices. More price-sensitive customers can be courted with periodic discounts, or by offering lower prices to those willing to jump through hurdles such as rebates, coupons, or price-match guarantees.

Each new pricing option you offer opens the door to a new group of customers.
– The Startup Daily

Pricing is traditionally determined by starting with the costs, and adding a profit margin to arrive at the final price.

However, this ignores the realities of the customer’s situation. This cost-driven approach can result in prices that are wildly more, or less, than what the customer is willing to pay.

Pricing Should Start with What the Customer is Willing to Pay

Set prices according to customer realities and then design a cost structure that will allow you to make profit at the target price. Price-driven costing ensures the customer’s needs come first.
– The Startup Daily

The more ideas you can generate, the greater your chances of finding the best solution to your problem.

A Quota Forces You to Actively Generate Ideas Instead of Waiting for Them to Occur

Setting a high quota forces everyone to get the safer ideas out early on, clearing the air for less obvious ideas.

The human mind can stretch to fill even the most ambitious quotas.

Once you have committed to a quota, stick with it, and don’t end the brainstorming session until it is met. You don’t have to stop when the quota is met if the ideas are still flowing. A quota does not prevent you from generating more ideas, but it does ensure you reach the minimum.
– The Startup Daily