Thread by @dunkhippo33

I want to talk about trust. If you're pitching an investor, establishing trust is really important.

Pitching is not only about convincing someone that you will grow their money but also that you will be good stewards of their money.

A thread >>

1) One of the reasons investors sometimes take so long in making a decision on an investment - especially if they are writing a large check -- is that they need to trust you w/ a significant amount they are managing.

2) And part of that exercise is for investors to have enough touchpoints with a founder to get a good read.

If they detect something fishy at all -- even remotely -- that's the end of the conversation. And not just on this business idea but all subsequent ideas.

3) Here are example of fishy things that set off red flags:

elizabethyin.com/2017/04/09/tru…

4) Now as an entrepreneur, you're always selling. But, sometimes there's a fine line between selling the vision of what the business can be and what it is now.

It is SUPER important to make clear what is now and what may happen down the road.

5) A quick story: a couple months ago, I took a pitch with some founders. Seemed like smart ppl working on a highly unusual idea. I was very interested.

But then they had one slide that read "Signed $700k" next to a large company's name.

6) At first that was exciting! Wow, it's super rare to find a company so early who has such a large contract signed! (Note: we don't even care about whether you have revenue when you pitch us @HustleFundVC - most cos don't.)

7) But in digging deeper, the contract had NOT been signed!!

It was "on the verge" of being signed. The contract was out and in the hands of the large potential customer. But it was NOT SIGNED.

8) The team believed it would be signed in the next week. So this may not have seemed like a big deal to them.

But, to me, it was a LIE. And since I didn't know them, and that was the 1 major thing that stuck out in my interactions with them, trust went to 0.

9) I pointed this out and told them as nicely as possible that they cannot lie like that. And that I highly recommended they change their slide before pitching any additional investors.

10) But it was over. I'm sure they are great ppl and that was a small mistake. And maybe they did close the contract w/ that major customer the following week. And maybe they will go on to build a big company.

11) But none of that matters. And the reason is that one little stretch of the truth sets the tone for all future interactions.

If I were their investor, how do I know they wouldn't stretch the truth in another context? How do I know they would level with me?

12) That matters MORE to me than any impressive progress they could ever make.

Moreover, there are many entrepreneurs I've first passed on but then invested in after they've changed business ideas.

But in this case, I wouldn't be able to do that.

13) So as you go into pitch, make sure that you clearly define what you have today. And where you are going in the future.

Blurring of the two can lead to either misunderstandings or little lies that become a slippery slope.