Thoughts on startups by investors that
fund them & entrepreneurs that run them

Don’t Confuse Optimism with Business Potential

Overheard:

I love your optimism. What I don’t like is the complete lack of experience that’s causing it.

Ideally, a business pitch is exciting because the business potential is exciting. Optimism ought to be a combination of potential market, product-market fit, scalability, defensibility, and management experience. Better yet, early sales, initial growth rates, proof of concept in buyers or users or subscribers or signups or something equally concrete.

Frankly, in a business pitch, I mistrust shows of undue optimism, passion, and resolve. I worry that early-stage entrepreneurs are working towards some mythological promise that will alone can make a business successful. I don’t want to invest in passion unless it’s tempered by experience and based on a solid business plan.

You’ll find people talking about showmanship in business pitches. Absolutely. Tell your story well. Tell the story of the market, the need, the solution, the steps along the way, and the team that’s driving it. But it’s about your business, and you fit in as the manager who will drive it. Angel investors will frequently talk about betting on the jockey, not the horse. In that case, it’s betting on the jockey’s skill and experience, not just optimism or passion.

It’s a fine line. Sell your angel investors your business, not your optimism.

 

 

All opinions expressed are those of the author,  and do not necessarily represent those of Gust.

Written by Tim Berry

user Tim Berry

Tim is the founder of Palo Alto Software and bplans.com, the co-founder of Borland International, and the official business planning coach at Entrepreneur.com. He has been called the "Obi-wan Kenobe of business planning" and "The Father of Business Planning." He is a serial author of books and software on business planning.

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