Matching your moat to your value - the missing link

The concept of an economic moat, or strategic competitive advantage, has a special importance in the world of entrepreneurship. In the initial stages of fundraising, your reliance is on the strength of your idea and your team. As you progress it becomes essential to demonstrate a clear pathway to achieving product/market fit and, ideally, to secure early revenues (see Funding Napkin for more). However beyond that investors will shift focus to your prospect for safeguarding your revenue streams— essentially, what is your economic moat or what could it become?

It’s all very well having a great product and team, demonstrating a revenue model and positive unit economics, but that’s zero value if a competitor eats you for lunch the next day.

A VC sent me this classic recently, A Taxonomy of Moats. It’s a masterful summary but what struck me is this figure… it is literally permeated by intangible assets (highlighting Intanify’s).

And it’s more profound than it initially appears because many of these moats are barely relevant in the modern economy (for instance, the natural resources industry's share of value has dwindled), or they are simply out of reach for most young companies (very few startups can rely on securing legal monopolies or become state champions).

Remarkable companies often possess not just a single moat but a combination of powerful elements, such as a sophisticated piece of code, proprietary data safeguarded as trade secrets, deep customer insights, and a unique corporate culture.

The challenge lies in effectively conveying these advantages—assuming you’re not ex-McKinsey. Even more intriguing is the prospect of mapping these assets to the value your company represents.

I was particularly thrilled to come across this taxonomy as it aligns with the 25 intangible assets in the world of Intanify. Currently, we offer an Intangible Inventory, essentially the balance sheet you wish you had, along with visualisations like the Value Map, which allows companies to articulate their value composition. It also aids investors, financiers, and boards in understanding a company in terms of its fundamental building blocks.

Imagine the power of linking a company's concrete and distinct assets to the moat that fortifies its defensibility. Would this approach anchor strategic discussions in the real components of competitive advantage? Could this method assist companies without the benefit of ex-Bain or ex-BCG professionals in conveying their sustainable competitive edge, to the management, investors and more?

Intanify is in the process of discovering the answers to these intriguing questions!