How to Convince Investors
19 hours ago
- Lifting heavy objects should be done with the legs, not the back; similarly, founders should convince investors by letting their startup's merit do the work.
- Investors seek startups that can become huge successes, with outcomes following a steep power law, and they treat 'big success' as binary.
- To seem like a future big success, founders need three things: formidable founders, a promising market, and evidence of success.
- A formidable founder appears justifiably confident and determined, which is key to investor interest.
- Inexperienced founders should stick to the truth and convince themselves their startup is worth investing in before pitching to investors.
- Convincing investors requires being a domain expert, understanding the market thoroughly, and presenting clear, truthful explanations.
- Investors view startups as bets requiring a plausible path to owning a big piece of a big market, often starting in a small market with growth potential.
- Rejection is common; founders should address investor concerns openly and explain why they are mistaken, especially with top investors.
- The best fundraising approach is to make something worth investing in, understand why, and explain it clearly without exaggeration.