How do you handle a potential investor who doesn’t get your problem space, but thinks they do?

I don't get it. If they think you're clueless why are they even talking to you? Its not like they've ALREADY invested and now have a vested interest in making sure you didn't eff up.

On one hand you seem to be bitching that you can't get the money, on the other it seems like you have no shortage of investors who want to talk to you. Do you have like super awesome connections or something?

Pitch your idea to a friend, and incorporate in your pitch a clear and loud note about how this is not this other thing. At the end, talk to your friend about the idea enough to see if he got it right or made the same mistake the investors make.

Do this 4-5 times with different friends. Experiment with ways to highlight the difference.

When I teach there are some points students consistently get wrong, and from my experience after my 4th or 5th attempt I find the right way to make it clear. It usually goes something like "you WILL get this wrong, so remember: this goes THIS way, while that goes THAT way. The difference is BLAH because BLAH." The difference always has to be stated in much clearer terms than it is in my initial attempts. But the right way is down to nuance and really does differ between ideas I'm trying to convey.

I would expect in this case a nice way to state it would be through the words of a customer. "Brian Koch, [relevant position] at [big potential customer], says '[I have a problem with the current way of doing things]. [The biggest solution in the wrong space], [the second biggest solution] [and their like don't solve it for me because they're dealing with the wrong problem. They are meant for cases where X while in my case it's Y]. [Your solution] [does solve it, because it does Z]."

But again, experiment.

From what you describe I would say that there are probably 2 things:

You are not explaining your space well, or dubming it down to make it simple for investors. Maybe you're using an "it's an x for y" comparison that throws people off. Either way, if people are consistently getting it wrong, the problem is likely your pitch.
You are talking to the wrong people. If you are looking for investors that get your space, you should be seeking those out specifically, and not relying on inbound or just people in your network. When we raised our seed round, we shortlisted about 150 investors off of an AngelList, according to markets they are interested in and previous investments in relevant companies. Relevant professional background is also important. There are a lot of investors out there, so to optimize your process you should try and get meetings with people who you would think should get it.

original poster here. You guys sound like like the thoughts in my head.

totally agree I've got to get focused on specific investors vs. some of the more general funds. on that.
I can't use a simplistic x for y here because y is not well known,it's inside baseball.
I've been working on the pitch for awhile now. it keeps being refined, it is getting better, but fundamentally I find if an investor hasn't personally felt the pain this product is solving they have a hard time empathizing. Worse, some will think because the problem was not one they had, they can't grasp that they're not the target. For what it's worth, I watched another company in a totally different field get the same types of responses from investors.

So yes on one hand I am bitching, but at the same time I'm coming here for help because I recognize they're not going to change so it falls on us to adapt.

op again here. yes, I have awesome connections, so I can get meetings with just about anyone. (sorry, but hey everyone has <em>some</em> advantage, right? this happens to be our ONE. :) )

Sounds like you're miscommunicating your startup vision <em>and</em> not prequalifying your target investors properly.

Communication: 1-3 simple sentences that states what you do uniquely well for [target group].

- Stay specific & avoid adjectives

- I'm not a fan of X for Y, as it induces confusion and sometimes invalid comparisons in the listener's mind. It also a lazy way to avoid the useful mental exercise of actively distilling the core of what you do.

Pre-qualifying: If you properly identify the investors you should talk to beforehand, then you won't find yourself in dead-end convos. Structure your 2-3 stemmed line of inquiry. Eg to qualify active angel investor for my X startup, I'd ask in what industry, how much invested per deal, have they invested within last 3-6months, who they've invested in within this calendar year, etc. Do the equivalent question for your situation. Concise enough to ask in person (eg social gathering) or in writing.

QG

Shut the up with evidence. If you can't prove what you think with quality data, you're as clueless as they are