At each round in a company’s financing history, this decision must be made: do we begin to raise before we launch the product, release a new feature or grow the sales team or afterwards, when we have some data?

A startup can raise money by selling dreams or data. The earlier the company, the more an investment decision is an emotional decision and based on dreams. The later the company, the more data drives the investment decision.

Investors will always try to evaluate the risks in a business. It’s the responsibility of the entrepreneur to convince the investor the risks are worth taking, which is an emotional, but not necessarily irrational decision. Investors evaluate seed investments very much in this fashion. Some Series As are also decided this way. But later stage rounds (Bs and growth) are much more data driven. This notion exemplified by the distinction in backgrounds of typical early investors and later investors: product managers vs investment bankers.

Selling an investment using data is straightforward. Are the key metrics up and to the right?

Dream pitches are different. In my experience, the best dream pitches typically have this structure:

  1. Verbal background of the team: about 2 minutes on each founder.
  2. Telling the story of the business: this is the most crucial part. It relates the strengths of the team to the genesis of the idea and the market opportunity.
  3. Demo: the goal in a demo is to excite the investor to such a point he/she suggests features and evolutions of the product. At that point, they understand the problem, your solution and the opportunity in front of the company.
  4. Backup slides: no more than 4 or 5 that contain product roadmap, some data on the market opportunity, some signs of initial early traction if any, competitive landscape. Goal is to handle any big picture questions.



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  1. Pingback: When is the right time to raise: on dreams or with data? | Hearticle

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