Naval Ravikant’s advice for raising venture capital: “It is an emotional sale, not a rational sale”

The process of raising money from an investor is. A friend of mine once choked. He said, it's the process of young men and women seducing old men and women. You're essentially trying to get them to look at you and to see themselves in you and say, oh yeah, yeah, yeah. That's just like me. That's just how I think. I would do that if I wasn't so busy. The reality is I'm lazy now, but I would do that if I wasn't so busy. And so it is an emotional sale. It is not a rational sale. And you have to understand that it's core level. And the way emotional sales work is people get emotionally sold, not based on checklists. It's very rare to fall in love with someone. You say, well yeah, it's pretty good looking and he's pretty nice and he's pretty smart. It doesn't work like that. Usually there is one thing about the person that is so overwhelming that makes you want to fall in love with them. And the same way when an investor is deciding to make an investment in a startup, they usually look for one exceptional characteristic about the startup that they truly, truly adore. So there are four categories, I think of things in which you can really excel and it's important to be reasonable in all of them, but you want to just knock it out of the park. You want to be very, very good in one of them. And so those four categories normally are team, which is do you have a really high quality team, very smart people who have obviously accomplished good things, gone to good schools, or have just buil neat things in their spare time. The school thing is actually a little overrated. That's actually less important. It's more about just what have you done. If you can show that you have done something exceptional other than starting this company, that's a huge thing. Y Combinator. In fact, I think their main screening question is what besides starting this company, what is the most important thing you've done in your life? Or what is the most impressive thing you've done in your life? So be prepared to answer that question. The second thing is product. If you've built a product, it should look and feel good and be slick and high quality. I think a lot of entrepreneurs make the mistake where they show investors sort of half finished products or not working products and then try and explain their way around it. The reality is investors are users also, so they're highly visual. They want to see it, they want to play with it and they'll make up their mind very quickly. Customer traction matters a lot. So if you have customers, if you have users, if those users are organically joining and growing, that's very good. If you have to basically say, give us money and then I'll go get customers, they don't like to hear that. And then finally, there's this thing called social proof. Social proof is basically looking at what other people are doing and doing that. So in the investing context, what it means is, if you have one investor committed, very often you can get more investors interested, or if you have a famous entrepreneur or an advisor who's very knowledgeable, involved with a company, that can help bring in investors. So those are the four criteria that I think most investors look at. And you really want to be exceptional. At least one of them.