When you sit before a group of venture capitalists who are considering lending your new business money, how will you convince them that your business, out of perhaps dozens similar to yours, is the one they should invest in?   

If you put yourself in the shoes of a VC and have before you 10 entrepreneurs all with a similar idea, which one is the best?  How do you choose?  Most likely the entrepreneur who has delivered the best added value to their business idea will be the one who deserves your start-up funds. 

What is Added Value?

Whether your business idea is in a manufacturing or service industry, added value comes when you put additional value above the cost of the products used to manufacture an item, or in the case of a service, an added value above what is considered normal service.

Say for instance that you are starting a new business that manufactures carbon fiber fabric.  Though this is not a new product, your entrepreneurial venture can improve the processing of the carbon fiber fabric by including adhesive properties, or certain high-density textiles.

In a service business, you could deliver an in-demand service, such as software that has added features that make the programs user-friendly, or contain modules that help specific businesses.

Your added value could even be a certain niche in which your business operates.  It could be a regional niche, or a niche focusing on certain groups of customers.  Take a look at your business niche and find out if that is indeed part of your added value.

How to Show Off Your Added Value

Venture capitalists will want you to quantify your added value.  They want to see numbers.  It isn’t enough to say that you have a bonus material in every widget.  Do the financial analysis and present just how much money your business saves with added value, or how much more money it will make by selling the added value with the product.

Of course, you will want to use realistic numbers.  You can’t sell a new and improved mousetrap for $1,000.  Conduct the market research necessary and show the numbers of people who would pay extra for the added value of your product. 

When you can stand out among the dozens or even hundreds of new businesses vying for venture capital funds, you can bet that a reasonable VC group will consider your business in more detail.  Make it obvious and prove that your added value will be a money maker.