The Growth Story: You Must Have One

Many entrepreneurs approach me for funding. I find the biggest misconception is that you must first raise funding before you can launch and grow your business. In reality, the ones who raise funding have a growth story and can communicate it effectively to investors. Investors funding startups look for market validation and product validation - the product works and people will pay for it. There are some investors who fund deals based solely on the team, the space, or the technology, but these are rare examples. Most look for what I call the "Growth Story". They look for an operational revenue model in the business with increasing numbers on sales, team, product and fundraise. In talking with startup entrepreneurs, I find they avoid discussing their current revenues because they think the investor wants to hear big numbers. I tell them that investors don't expect startups to have big numbers. Instead, the investor looks for repeatable and predictable numbers. If your company is pre-revenue, then you can show how the business model is successful based on the unit economics level. At the core, this shows that you can generate leads, qualify, and close them for revenue that exceeds the cost of acquiring and fulfilling the customer. Over time, you can improve these numbers. Scott Adams once wrote "Losers have goals. Winners have systems." A startup pitch deck filled with forecasts alone is just a set of goals. A pitch deck showing how the business model currently works is a system. It's best to show up with a pitch deck showing how your system is working today. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let's go startup something today!