Startups Are All About Convincing People
In the midst of fundraising for Party with a Local it occurred to me that running a startup basically comes down to series of steps of convincing different people to believe in you.
It starts with yourself — convincing yourself that it’s a great idea, which is so important that you should drop everything else, and to go all-in.
Family and friends are usually next — although pursuing something that doesn’t make much (if any) money immediately can be a tough sell to even some of your closest friends and family.
Then it’s convincing a team to join you — to pass on potentially better jobs (at least on paper) and better salaries (almost definitely), by selling them on your vision (note: it helps when they already share the vision and live the concept you are working on).
Then it’s about users — making your product and the experience so good that people actually use it, keep coming back, and tell their friends. This is an ongoing process that never really ends - you have to keep listening to users and keep improving.
Then it’s about convincing people to pay for the value you are providing AND/OR raising money for your startup.
Whilst we’ve monetized, in some small ways, we’ve mostly gone the investment route with Party with a Local to date.
Investors (Part 1) — It normally starts with friends and family or Angel investors. For Party with a Local, we convinced an Angel investor to invest in us early, by selling the vision and showing a live product with micro-traction. This helped us grow, to finalize our current team line-up, and to gain enough momentum to convince Techstars Connection, in partnership with AB InBev, to accept us into their startup accelerator (and invest in us).
Partners — During Techstars we were able to convince some really big brands to work with us — by demonstrating the true value our platform could provide them.
I’d argue that each step of convincing becomes more difficult and time consuming, and rightly so, as you go from ‘just an idea’, convincing yourself and people you know, and build towards a real business convincing strangers and companies.
Investors (Part 2) — The next stage of convincing people, in which we find ourselves in now, is convincing more seasoned investors (VCs, prominent Angels) to invest in us. It becomes a process of research, warm introductions, meetings, pitch decks showing real traction, pitches, follow-ups, more meetings… and a lot of ‘No’s’ — anyone who has been through fundraising for a startup can relate to what a challenge it is (even hugely successful startups today, like Airbnb, initially got rejected many times when trying to raise money).
It can become even more challenging depending on the space you are in, the current investment market, whether you’ve had previous startup success, and a whole host of other factors.
During Techstars I received a great email from Jason Seats, on the topic of ‘convincing’ investors, he told me:
“For someone to invest in you at this stage, they need to believe the following things:
- That there is a real problem (or opportunity) in the market.
- That your product solves this problem (or accesses the opportunity) well enough that a customer will pay for it (or otherwise transfer some form of value to you for it).
- That your team is able to execute well enough to build a business around that product.
- That the market is or can be sufficiently large to build a big business and that the competitive landscape could allow for you to succeed in getting to scale.
- That there is limited availability to invest in your company”.
On top of this, it’s also about HOW you tell all these things as a ‘story’, and sell your startup / dream with that story, as Loic Le Meur notes in his excellent post: Here is how you (really) raise funding.
As comedian Steve Martin once said, I believe convincing people to believe in your startup, basically comes down to being “So Good They Can’t Ignore You”.
…Working on it!