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“We’ve accomplished all of this with no money. Imagine what we can do if you invest in us.”
I hear this line all the time. I used it myself when I pitched my last company. But now I know that it’s a double edged sword. Here’s why (
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I hear this line all the time. I used it myself when I pitched my last company. But now I know that it’s a double edged sword. Here’s why (
)
First, the good. Getting something launched and growing with nothing is amazing, super hard and commendable. You clearly know how to hustle.
Here’s the bad: when you grow your biz without money, you don’t learn how to spend intelligently. And that’s a big risk to investors.
For example: say you grew your d2c brand organically. That means that you don’t know what paid channels to invest in when you need to. You don’t know your caq. You may not even know how to run a business that measures its caq! That’s not good.
(And no, you will not grow organically forever. Eventually you’ll need to acquire your customers. I’d rather you know how, where and for how much).
Another example is product. You built the thing yourselves, or you faked the backend, and got very far on matchsticks and tape. That’s awesome! Congrats!
But also: that only tells me you know how to hustle. It doesn’t tell me you know how to build a team, process and system that can reliably deliver once you’re no longer doing everything yourself.
In other words: hustle is important. Bootstrapping is impressive. Teams that go fast and far with no resources are super exciting to see.
But to invest in that team, I also want to know that they know how to invest and manage resources intelligently once they have $$.
But to invest in that team, I also want to know that they know how to invest and manage resources intelligently once they have $$.
So if and when you use that line in your pitch, make sure you also tell us that you know how to run and grow a company that has resources. How will you use those funds? What have you learned from other experiences? Who’s on your advisory team that can help you figure it out?
I’d rather invest in founders who know how to use the money, than in founders who need it but won’t know what to do with it.
Go for it!
Go for it!
