How to Succeed as a Niche Startup Founder

The sleep industry is a billion-dollar business and is continuing to expand. Every day medical professionals and the general public are now focused on getting more and better sleep as part of an overall strategy for better health. 

Michael Masterson, co-founder and managing partner of investment firm Supermoon Capital, is hyperfocused on Pre-Seed to Series A stage startups in sleep. Supermoon Capital is taking part in our Pitch Practice, where a handful of founders will pitch for three minutes and then get direct feedback. He is also participating in the Office Hours where Angel/Series A+ Founders Network members will have 10-minute private sessions.

Takeaways:

• Know everything about the investor you’re pitching to
• Understand the problem you’re trying to solve 
• Determine why your company should be selected and focus on why your idea is the solution to a problem.
• Understand your customer and the competitive landscape
• Hire the best people from the beginning  

To have a successful pitch, you should know the investor inside and out, so the Founders Network talked with Masterson about what makes Supermoon Capital special and how to  successfully pitch to them. 

• Know everything about the investor you’re pitching to. 

Masterson said they’ve assembled an arsenal of sleep science resources and relationships. One part of this arsenal is their team of six leading sleep scientists in the world.

“They are not just listed on our website,” he said. They’re advisors and thought leaders who are incentivized based on the performance of the fund.

Supermoon also has SleepScore Labs as an exclusive partner. Masterson said they are the leading sleep-focused R&D services company that has collected about 70 million hours of sleep data over the last decade or so.

“Their range of R&D services are really relevant to our portfolio companies,” Masterson said. So if a prospective founder needs testing to back up the effectiveness of their product’s claims, as an example, Supermoon has access. 

SleepScore Labs has the partnership with Mattress Firm, one of the largest sleep product retailers in the industry and ResMed, the leading sleep apnea clinical therapy R&D firm in the world, is also an investor in Supermoon.  

“Not only are we providing capital, but we have a lot of different ways that our companies can access different resources and relationships, depending on what their particular needs are,” Masterson said. 

• Understand the problem you’re trying to solve 

Keeping up with how the science is changing and what pain point you’re trying to solve is key to a successful pitch. 

“Sleep is moving fast right now,” Masterson said. “And even since we started our fund, for example, the diagnostic landscape has changed dramatically.” He estimated an even split in the percentage of sleep studies taking place in a lab versus at home. The pandemic has shifted a lot of sleep testing to the home. 

Masterson said the pandemic will have a “legacy effect” that will impact the development of tests and devices intended for home use.

• Determine why your company should be selected and focus on why your idea is the solution to a problem.

When looking at companies to invest, Masterson said he looks for why that person is the right one to select. He’s looking for someone with a “highly relevant background and a passion for solving this issue.”

“Usually there’s a personal story involved that’s driving that extra gear,” he said. “That’s something that we look for.”

• Understand your customer and the competitive landscape

Since Supermoon specializes in what they call the emerging “Night Market,” founders don’t need to explain to them why sleep is important. Instead, they need to give specific information on who their customer is, what competing products are available and why their product or service is key in helping people sleep.

Masterson said the phrase, “You can sleep when you’re dead” is just not relevant any more. He said “this older, more pervasive attitude is changing.” 

• Hire the best people from the beginning

Masterson said having the experience of being a startup founder himself was one of the best decisions he ever made. Starting a company from the ground up helped him become a better investor.

“The biggest thing I’ve learned that I would share with new founders of companies is that it’s really difficult to attract and hire really good people,” he said. “People are what make or break, in my opinion, a startup at the beginning.”

Founders should develop the ability to attract good talent and develop them early on into leaders of organizations. Planning ahead and surrounding yourself with the right people is how a founder can succeed. 

For more insightful feedback from Supermoon Capital, join Michael Masterson for the next Pitch Practice and Office Hours or request to join to access the many resources that Founders Network offers or find out if you qualify for full membership here.