How to Convince Investors

Paul Graham tells us how to convince investors....

Published Aug 7, 2013 in Startups
Scroll

Paul Graham tells us how to convince investors.

When people hurt themselves lifting heavy things, it’s usually because they try to lift with their back. The right way to lift heavy things is to let your legs do the work. Inexperienced founders make the same mistake when trying to convince investors. They try to convince with their pitch. Most would be better off if they let their startup do the work—if they started by understanding why their startup is worth investing in, then simply explained this well to investors.

Not surprisingly, the advice basically comes down to “build your business”. Fund raising is a distraction, sometimes a necessary distraction, but a distraction nonetheless. Founders should be focused on building a great business, do that and if you need money the investors will see it. But there’s not some magic slide, or pitch style that makes investor open their wallet.

He makes another great point, how convincing you need to be depends on the stage you’re startup is at.

The standard of plausibility varies dramatically depending on the age of the startup. A three month old company at Demo Day only needs to be a promising experiment that’s worth funding to see how it turns out. Whereas a two year old company raising a series A round needs to be able to show the experiment worked.

You should probably just read the whole post.

Never Be a Customer's Doormat

Yep. Big customers are great, if they accompany...

Published Aug 6, 2013 in Business, Startups