When startup founders start thinking about money, they start thinking about angel investors. What are these elite, wealthy creatures like? How can I sell them on investing in my company?
They'd be better off forgetting about the heavenly flock of angels and thinking more about the local gas station attendant.
Imagine that you’re on a road trip, almost out of gas, and you pull into a gas station in your crappy little car. Except this crappy little car is the present state of your company, and the attendants aren't selling gas, they're selling money. That money could be the gas for your journey. But how can you buy it? What currency can you use?
The answer is that you have no currency except your trip itself. “Come with me on this journey” you say to them. “Pump the gas and then sit down next to me and off we’ll go.” At this point the gas station attendant has four things to consider:
Does he or she want to sit next to you on this trip? Are you someone interesting and sympatico that they’ll want to spend hours with on a long bumpy ride? Do you seem like a person with the fortitude to stay on the road even during a storm, but the humility to take a detour if the road gets washed out? When they tell their buddies or spouses or children about this journey will they get laughed at? cheered on? will it make a good story?
What’s the journey look like, as far as it’s possible to tell? Will their gas get you to the next stop? Is that next stop somewhere worth being? Is there another gas station there? Do you have a map in the glove compartment that the attendant can trust even a little bit?
What’s the final destination? Is there even a vaguely plausible chance that this car and this driver on this route can make it to Huge Piles of Moneyville? Sure it’s unlikely, but is it even possible?
How crappy is your car? The road will definitely be bumpy, but are the tires bald? The backseat drivers obnoxious? The engine too small or leaking?
Founders make the mistake of thinking that they're selling and the angel investors are buying, but it's more productive to think of this transaction in the opposite direction. Angels are money sellers, looking to exchange their cash for a great ride. Can you offer one?