Kak
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As @Kak is trying to convince people to do bigger deals and to build businesses that are bigger.
How would you feel if the we would approach with only prototypes of our products and no sales yet?
But having those products tested and pre-sold to prove demand?
There is a spectrum for an investment. You could use a lot of different words for it.
On the LEFT side of the spectrum is:
Higher risk, total speculation, a bet on the entrepreneur. Higher potential reward for investors.
On the RIGHT side of the spectrum is:
Lower risk, Collateralized and safety. Often reserved for loans and banking. Lower potential return for investors.
In the MIDDLE are some companies that may have some sales, or some proof of concept, or a company committed to buying what you eventually build.
You don't necessarily need sales, but you need SOMETHING. You need to be creative, build a compelling offer, and an easily explainable expectation of sales. When you boil this down to simple capitalism... Win-win, mutually beneficial, exchange of value, it gets easier... What will make an investor RIGHTFULLY believe in you? Get in the head of an investor. This isn't a handout. They are not doing you a favor. This isn't fake it until you make it. This isn't bluffing. This is putting the best hand together with the resources you have available now and then playing the hand. Don't go to an investor with a pair of twos.
Every business starts on the LEFT side of the spectrum. As time ticks on you are moving the business from the LEFT side of that spectrum to the RIGHT. You are armed with more and more information. Your venture capital gets cheaper and cheaper for you to take on. Your hand gets better.
My suggestion is usually to limit assumptions as much as possible. Don't misconstrue what I am saying with trying to get investor money when you literally have nothing. The more you limit the assumptions you have to make, the more and more of a picture you can paint for potential investors, the more money you can raise and the less you will need to give up in return for it.
A LOT of assumptions can be limited with sweat equity. You can answer a lot of questions by being that aggressive entrepreneur and pounding the phones. That aggressive, go getter, action taking will also show when you present this information. Not only are you clearing up the picture for the business, you are justifying yourself as the expert, as the right leader for the venture.
There is a LOT at play in every business and the answer is almost always "it depends." There is very little cookie cutter advice, but the biggest and fastest growing new companies that you hear about on CNBC, filing for IPOs, interviewing their CEOs... Those guys got VC money.
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