Over the last decade, clinical professor of strategy and venture capitalist Carter Cast has met with hundreds of entrepreneurs, listening to their pitches and reading their business plans. His aim: decide whether to invest.

So what, in Cast’s eyes, makes a company stand out? This week, we’ll hear some of his tips on how entrepreneurs can best position their startups when talking to investors. We’ll also highlight some new research that tackles one of marketing’s oldest and thorniest challenges: figuring out how much customers are willing to pay for a product.

The right stuff

About 35 percent of startups fail simply because there is no real need for the product. For that reason, investors kicking the tires of a potential investment are looking for strong evidence that the new offering is actually necessary. Cast says primary research, in-market tests, and comparisons with existing products are some of the best ways investors can make the case for usefulness.

“I’m listening for proof that there truly is a need, that the prospective customers aren’t getting an itch scratched and this will do it,” Cast says.

Of course, this kind of proof can be particularly difficult for early stage companies to generate. And the more unusual or unexpected your idea, the harder you will need to work to show that the demand is there.

Once you’ve convinced an investor of the need for your product, you also have to show that what you’ve developed successfully addresses that need. Too often, Cast says, entrepreneurs are led by blind faith in what they’ve made and don’t have enough in-market research to support their convictions.

Rigorously testing what you’ve made is crucial, and investors are looking closely at those tests. “It’s really important to talk to potential customers during that discovery process and to approach those interviews and early product demos with a beginner’s mind,” Cast says. “Your potential investor is going to ask you to talk about the research that led you to conclude you have product-market fit. Having real answers, real proof, is critical.”

You can read all of Cast’s advice here.

The right price

One of the most important decisions firms face is which price to charge customers. Set the price too high, and you may fail to get any takers. Set your price too low, and you might achieve plenty of demand, but you’re leaving money on the table.

“At its core, this is a classic problem,” says marketing professor Derek Rucker—and over the years, many researchers have tried to crack “willingness to pay,” or WTP.

But when Rucker and fellow marketing professor Eric Anderson, along with Kellogg alumna Sharlene He, now a faculty member at Concordia University, surveyed the landscape, they found that current methods of estimating WTP had serious downsides.

For example, previous research has often found differences in people’s WTP across different contexts—for example, people are willing to pay more for a beer at a hotel bar compared with a beachside vendor. Yet many studies have measured WTP by simply asking people what amount of money they would spend on a product, without providing any details about the situation in which it is being purchased or the available alternatives.

So Rucker, Anderson, and He developed a new way of calculating WTP that overcomes these downsides. “What’s fundamentally different about our procedure is that rather than simply asking whether you would buy or not buy something, we first want an understanding of who the competition is,” says He. “We want to ask, if you were not to buy this product, what would you buy instead? That’s going to be the relevant comparison shaping someone’s WTP. We don’t assume that the answer is they would buy nothing at all.”

You can read more about the researchers’ new method, and the experiments they used to validate it, here.