Finding investors is key to success in the automotive industry, but how can you win them over? Most investors willing to fund new entrants expect to face a certain risk factor. Supporting a new player on the vehicle market comes with a higher risk of loss, but also a higher revenue potential than simply investing in an established company.
Thus, new entrants need to convince investors that their vision has high growth potential and meets all expectations for a safe, stable and on-time development.
These five vital cornerstones are indispensable to deliver the message:
1: A USP That Captivates
Every new product needs to offer the target audience an argument why they should by this product over other, similar products: the unique selling proposition (USP).
The USP is the best or even only answer to the most important problem of the target audience as products always exist to satisfy a certain customer or to solve a specific problem.
But why is a good USP so important to investors?
First, something that benefits the market also benefits the investor – as it promises success.
Second, a solid USP indicates that the team operates in a focused way and is able to determine current trends, demands and possibilities on the market.
2: Comprehensive Knowledge About the Market
A new entrant must be able to prove their credibility as a vehicle manufacturer. Thus, investors will expect their potential business partners to have both the knowledge and the data about all aspects of the product itself and the environment in which it is released.
This includes general knowledge about the vehicle market as well as the specific target market of the vehicle, including competitors, customers and developments. Also, a clear picture about the future development process and its risks and a well-conceptualized strategy to overcome these risks are essential.
As most new entrants don’t have the means to conduct a large technical feasibility study on their own, it makes sense to team up with capable technical partners. As an additional benefit, the cooperation with a well-known industry name adds credibility to the new entrant and their vision, thus making it more likely to acquire investors.
3: A Solid Business Case
The business case is vital for the investor pitch. It highlights the financial requirements and the overall schedule of the project and should thus be formulated as completely as possible.
A project as large as developing a vehicle will in most cases require the search for multiple investors, each contributing a certain part of the total money required. Additionally, investors will also scale their contributions according to the project’s progress. Thus, a new entrant also must maintain credibility as a reliable partner towards investors.
4: Well-Conceptualized Marketing and Sales Strategies
Even though the USP highlights the key problem and its solution, it still needs to be converted into marketing and sales strategies in order to convince the future customers of the product. In short, a marketing strategy establishes the direction of the brand communication, whereas a sales strategy sells the actual product.
Investors naturally also expect a new entrant to have both of those strategies formulated and planned out, as they are the primary measures for driving the brand’s earnings performance.
5: Confidence in Your Abilities and Passion for Your Idea
Besides the technical, financial or organizational matters, vehicles in particular are very often a passion project – not only for their creator, but for the people taking part in its realization. Also investors will in many cases share the passion or will at least have an interest in the project beyond the financial aspects.
Thus, a compelling presentation of the vision behind the vehicle, the emotional incentive of the vision as well as the passion and confidence behind the project can help considerably to captivate investors.
Pack Everything Into the Perfect Pitch Deck
Once the five cornerstones above are established, they need to be conveyed to investors. This is usually done in in-person meetings with investors and a concise and convincing pitch deck. As a snapshot of the project, the pitch deck should include:
1. The USP of the product (problem, solution)
2. Information about the target market, competitors and
potential/established project partners
3. The business plan, including the timing and financial plans
4. The marketing and sales strategy as well as an assessment of the
expected revenues and when they are estimated to be in the black
5. Information about the new entrant and their team’s qualifications and
The pitch deck often serves as the first impression of the new entrant as not all investors are brought to the project via a sales pitch but by investment banks. This makes it even more important that the deck stands on its own as a convincing argument for viewers to see.