When venture capitalists search for companies to invest in, they are counting on the competence of the founders and the entire team to win. Meaning, if there are more hints that this company will result in failure than it will success, it's unlikely they will invest in it. They look for indicators to assess worthy startups.
A similar and time-tested method is seen in the duck test coined by James Whitcomb Riley. You've heard it before, "when I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck."
Now let's apply this to a startup, specifically two kinds of startups. One that is a good investment and one that is a risky investment.
A startup that walks like a good investment
The manner by which a startup carries itself says a lot. This includes outward appearance and poise. If you look like trash or are missing key pieces of attire, expect the reception of your appearance to follow suit. For example, not having a website in the 21st century is the equivalent of showing up to a party without pants. You're missing something and it reveals a hole in your competence. Same could be said of the design of your product or your branding. Negligence of these is reason to believe that you are not a worthwhile investment.
A startup that swims like a good investment
A duck's primary function is to swim. They are very good at it. Similarly, a startup's job is to make money through having a worthy offering. There needs to be proof of this. If you don't have a solution to a prevalent problem that will make a difference, customers will not use you. If customers don't use you then investors can't either. If you want revenue, of any kind, you need something worth giving up money to have.
A startup that quacks like a good investment
Trickier than the last two, but important nonetheless. A duck's quack is the outward expression to signify "I AM A DUCK." What's a startups outward expression? "I am valuable to others." Meaning, people will pay for what I have to offer because it is more valuable than their money. The brevity of a quack is just as important. The more succinct, the easier it is to identify. This comes in the form of positioning and high-level brand messaging. Failure to define your quack will make it difficult for investors to identify you as a good investment.
If it walks like a worthy startup, swims like a worthy startup, and quacks like a worthy startup... it must be a worthy startup. Worthy of customer buy-in and investor money.
Can you pass the duck test?
More products, more money, more followers, these are hungry ghosts. Insatiable phantoms that have no value and never stop getting bigger.
More is an endless struggle. But, getting good at something, and improving your business, your brand, or even yourself is something measurable. You might have different goals, but the process is one that you can actually control and have a major influence on.
"More" will naturally result from being good.
Of all the things wrong in this world, telling a lie is my least favorite. Mainly for this reason: it prevents anything from improving.
If you tell a lie about a situation, you are intentionally shoving any prospect of fixing it out the door. In the startup world, this comes in many forms, "we're gonna have a billion dollar valuation," "our financials are steady," and my least favorite "we're the best."
Look, don't get me wrong, I think you should strive for a billion dollar valuation, you should strive for steady financials, and you should put your best efforts forward, but don't let these aspirations replace the truth. Like the fact that your startup is maybe worth $20,000 as it stands. Or that your financials are super shaky and your revenue streams are scattered. Lastly, don't confuse your best efforts with being the best solution available.
Why? Because if you let these lies replace the truth, you will certainly overlook what is stopping them from becoming true.
Without a doubt there are aspects of your startup that are amazing, and that you are brave enough to go out there and make something happen. But you will never get better if you cannot look your shortcomings in the face and accept that things could be better.