How Does Your Startup Solve Problems?

At this point, it is time for you to address how your startup solves the problem that you established in the previous step. The trick is to express the solution with surgical precision; do not get caught up in the details. Instead, focus on the essence of your solution. Try to explain it as though you are talking to someone who is a stranger to your industry.

As Ben Franklin once said, "If I'd had more time, I would have written a shorter letter." There is value in brevity. If you are able to convey your solution in just a few short phrases, you will demonstrate to your audience that you have a high level understanding of your own work. Many times, entrepreneurs get caught up in a linear way of thinking which traps them into thinking that details are bigger than they really are.

Communicating your solution is different from listing all of your products and services. Whenever you find yourself making this mistake, revert back to the more abstract form of your solution. What is the fundamental solution that your startup brings to the table?

You should also demonstrate that your solution has built in desirable features, such as: scalability, resilience to competition, network effects, viral marketability, robust supply chain, etc (these are just examples). Your audience will want to know about these aspects of your business, as they translate into profits.

The solution section should be focused on building value and generating interest, rather than sharing details or action plans. The latter topics are reserved for follow-up discussions and strategy sessions, which take place after you have already secured the curiosity of your investor audience. Many startup founders make this mistake: they assume that their investor audience is already interested in their idea, and skip directly into the details of their business plan. This is wrong. The elevator pitch is called a "pitch" for a reason, you are performing a sales role when you deliver it. Therefore, you should always emphasize benefits, rather than features, when explaining your solution to a prospective investor.

Action Items:

  • Write your solution to the problem which you identified in the previous step. How does your startup solve the problem?

  • In a few short phrases, explain how your solution is unique and scalable. Use compelling language. This is a sales pitch.

  • Don't get caught up on explaining the "features" of your solution. Instead, translate them into benefits.