*Instead focus on propagating a belief in the form of opinions*
Original Date : 06-12-24
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Pitching a startup is different to pitching a project. Maiab says it best. A founder needs high conviction not permission.
<blockquote class="twitter-tweet" data-media-max-width="560"><p lang="en" dir="ltr">you are pitching your startup to VCs all wrong, stop acting like you’re proposing a new project at your job, you need to bring different energy <a href="https://t.co/brmKC4Bcub">pic.twitter.com/brmKC4Bcub</a></p>— Maia Bittner (@maiab) <a href="https://twitter.com/maiab/status/1640724468069990404?ref_src=twsrc%5Etfw">March 28, 2023</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
A startup adding value is only a belief at the beginning. Investors would also like to believe that startup adds value. So they resonate with the belief and fund the startup.
They would like to see the belief become prevalent across the sector and customers in order to have exponential returns.
Yet founders spend time establishing value to investors. Through this they run into a rut of trying to establish value through multiple methods and complicated calculations.
Few focus on finding resonating beliefs that could super spread across the industry. Such approach becomes table stakes in legacy domains like agriculture and logistics as the problem they are solving is a novel approach not a fundamental problem.
For example, Autonomous truck solves transportation movement different to driver driven trucks.
Digitising of logistics transaction increases efficiency is a belief that resonates but not necessarily adds value to any of the stakeholders. So, you would witness startups being funded using that message and operators scratching their heads thinking what were investors thinking.
A belief could either be an approach or a trend or an eventual progression due to changing technology. You need to focus on making everyone else believe in your opinion of the future. This will sound pompous, I agree, but grandeur is endearing to investors.
This is hard to adopt and seep into an operator’s mind. Since they believe value is universal and obvious to everyone. Unless the investor is a customer, they don’t know how to perceive value. Its like beauty, left to the eye of beholder.
This is precisely why investors seek proxy metrics like;
- How will a customer believe in your future? (monetisation )
- How many ? (total addressable market)
- How effective and efficient can we serve them? (unit economics)
- How will you propagate ? (marketing)
- Why you and your team?(authenticity)
None of these are about value of your service but are about stickiness of your belief.
So, when a founder begins their pitch with establishing value. An investor has multiple ways of questioning value realisation.
- They question the authenticity of value,
- They will seek proof on applicability of value across the industry
- And refute the viability of the value.
The founder spends countless hours preparing responses rather than focusing on their actual customers.
Instead if the founder starts with “the belief” and presents a coherent narrative. An investor who is serious can check with industry experts to decide their interested. The expert could be completely wrong but the founder will still be funded if the expert validated the belief.
Few investors rely on personnel heuristics at seed stages. Most of it comes down to believability of the founding team and their potential to deliver on their belief.
Next time you see a startup getting funded and in your opionion it adds no value to the customers. You don’t need to feel dejected. Instead, focus on propagating your belief by channelling your opinion, increase your leverage by building a coherent narrative around the belief. Then announce that you are seeking support to build this future. Or read the beliefs that investor share and pitch to them that you will make it a reality(only if you really want to be a founder).
To sum it up, getting funded and building value are not causal. They seem to be because of the correlation between successful businesses and them being funded. It is also a belief of the investors and you see them propagating it effectively.
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#PoV #startups #pitching