I would not win a fight.
Sometimes, I like to tell myself a nice story that I would win a fight. I’d be the gawky kid from the movies. My jock nemesis would load up to swing at me, and as the popular cheerleader (who really likes gawky kids, but doesn’t know it yet) watched on, I would perform some feinting, unexpected acrobatic nonsense to duck and make him look stupid, catching him off-balance and knocking him over like Luke Skywalker did to the Elephant Walker on Hoth.
Nope, I would definitely not win a fight. You know how I know? Because statistics works, and nine times out of ten, David doesn’t beat Goliath.
I tell this story for one reason: despite not practicing investable habits, many entrepreneurs cannot understand why they are unable to raise capital from investors. “They should give me money,” you might say. “My thing is awesome.”
I have bad news: they shouldn’t fund you, just like gamblers shouldn’t bet on me winning in a boxing match. Your thing might be awesome, but it also has untenable, unbankable levels of risk.
I have some more bad news: Despite that story you tell yourself about being the exception to the “9 out of 10 businesses fail” rule, the truth (note no capital “T”) is that you being in charge of it actually makes it higher-risk. Statistically, David does not beat Goliath.
You sense this. Yet, you’ve convinced yourself that you are a good investment.
What makes you investable? The same types of things that would make me a better bet in a boxing ring.
Winning in the boxing ring is a complex cascade of factors, but it boils down to me eating my veggies.
If I don’t commit to eating my veggies, how can I expect to arrive at the gym physically and mentally prepared to work the punching bag?
If I don’t arrive to the gym in the right state, how can I expect to gain benefit from working the punching bag?
If I can’t work the punching bag, how can I expect to benefit from training one-on-one with a coach?
If I can’t benefit from one-on-one training with a coach, how can I expect to spar effectively?
If I can’t spar effectively, how can I expect to win practice fights?
If I can’t win practice fights, how can I expect to win actual fights?
Maybe the sun will get in my opponent’s eye, and I can land the perfect punch? It worked for David.
Winning a boxing match is not something that happens to you.
It is something that happens because of who you are and what you’ve been practicing. It is something that happens because you’ve been eating your veggies.
Similarly, raising money is not something that happens to you, it is something that happens because of who you are and what you’ve been practicing:
- Have you been practicing articulating a goal, enrolling others to help you work towards that goal, then achieving that goal?
- Have you been practicing identifying your biggest risks, and executing on plans that mitigate those risks?
- Have you been practicing turning $1 of capital into $2 of revenue?
- Do you have evidence that your team can start to make that $2 become $3 or $4?
The good news is that there is good news.
An investor is looking to check only one box in evaluating you: does this team make plans, then make real progress on those plans?
Investability is not something that gets handed to you, it is an outward signal of who you are, as an individual, as a team, and as an organization.
The good news is that upgrading who you are as an individual, team, and organization starts with a simple question: have you been eating your veggies?
Thanks to Christopher Pagels for reading drafts of this post.