What Early-Stage Investors Hate The Most
…the worst thing is when first-time founders come asking for money before they have a basic prototype…if you don’t have a minimum viable prototype then how are you going to know if you are building something that people actually want?
Coupled with an founder not doing research on the focus of the investor’s investments are the thing(s) that early-stage investors hate the most.
Know thy investor. That should be written on the minds of every entrepreneur looking for funding. It is woefully poor form to go into a meeting with any investor, whether angel, VC or otherwise, without doing your homework on that investor. You can be sure that the investor you are meeting is researching your background and startup, so why would you go in unprepared?
So Mr. Alex Taub has is about right, except I would reverse the order. There are plenty of entrepreneurs that come to me with ideas without a prototype. What they do show however is progress on getting to the product.
What does progress look like? They have a team in place that is in building mode. They have talked to potential customers and documented findings. They have researched their market. They have wireframes and screenshots of the product. They have quit their jobs and gone all in on their venture. They are spending their own money to make things happen. While a prototype is better, it is not always necessary.
When I met Adam Neary from Profitably, he did not have a product yet. However, he had the core team of Francis Hwang and Chad Pugh, both superstars in the NYC technology and design community. Adam showed me datapoints confirming that he performed research and knew his customers. He had screenshots of the what the product would look like and what it would do. He left his very well-paying consulting job to do Profitably full-time. I was comfortable enough to invest based on the substantial evidence of Adam’s progress.*
So while a prototype is important, it is not necessarily critical for investors. What is critical however is doing the research to know about the investor, what they invest in, who they know, what their background is, etc. Would you do that for an important customer meeting or partner meeting? Nothing makes a conversation more uncomfortable however than when you meet an investor and do not know a thing about him or her. Therefore know thy investor and put yourself in a position to leave a positive first impression.
* If it not obvious from the post, I am indeed an investor in Profitably. Welcome to the world of disclosures…
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