Aristotle taught students wishing to be virtuous to “act as a virtuous person would”. Alfred Adler used a technique he termed “acting as if” to help people change their personalities. Generations have been instructed to “dress for the job you want”. Today we “fake it ‘till we make it”.
This age old technique equally applies in the world of startups. You can see it in action in lean techniques such as:
- Wizard of Oz which simulates unimplemented UX
- Lean Validation which validates the market by selling before a product is made (think Kickstarter)
- Marketplace Seeding which makes marketplaces appear feel fuller by adding fake entries (ever wonder how brand new dating apps always have tons of users?)
It also works when it comes to fundraising — if you want to raise capital you should start acting as if you already have. I don’t mean that you should ramp up your hiring or add another product line, I’m saying that you should act as if you already have investors and start doing the work that comes along with it. Much less exciting, I know, but vastly more important.
Specifically, there’s one thing every single company that’s raised capital has to do, no matter what industry or where in the world it’s located, and that is to
REGULARLY UPDATE INVESTORS.
Yep, I’m talking about investor updates. If you were hoping for some quick trick and are now disappointed, hear me out. When considering investing in your company, early-stage investors are trying to figure out four main things:
- Momentum — is there any traction / growth?
- Execution — can you make it happen?
- Relationship — what will it be like working with you?
- Market — will enough people pay for it?
Better than a pitch deck or executive summary, regular investor updates provide evidence for everything an investor cares about. Let me show you with an example: