Build a Moat

Warren Buffet once said, “I look for economic castles protected by unbreachable moats.”

In the startup world, investors look for a competitive advantage that can build a moat around the business.

“Me too” businesses are difficult to fund because anyone can start one and compete.

To build a moat around your business consider the following:

Build switching costs into your product to make it more sticky.

Create a brand that attracts others and is different from the competition.

Scale quickly to leave the majority of competitors behind.

Size can provide a decent moat once you have some scale.

Distribution can be a moat to provide more products and more revenue.

Network effects can provide a moat as the network generates additional revenue and decreases costs.

Technology can provide an advantage if the user finds value in it. 

The moat should not be easily duplicated because over time other startups will do so.

Moats should be considered from the get-go as they will increase as the startup grows and scales.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.