I've been trying to remember an accountholder's username in order to post this. Well, today my good-ol' brain decided to retrieve this great bit of info.
Two months back I had another argument, but this time it was on Instagram. It all began with this "inspiring" comment by the account holder:
Now, I'm not here to say that I know anything about investing, because I really don't. However, this is just insane.
I followed up with this reply:
If you don't have skin in the game (i.e. you haven't sold shit, generated revenue, or incurred costs) what makes you think that investors will be willing to throw money at an unproven business model based on simple theory. A business model isn't enough to impress an investor, its got to have been tested. That's why past sales are important. They serve as a proxy measure for future potential. So I do think someone forking over millions of dollars cares about past performance [especially] of a highly volatile startup company.
Soon afterwards I was barraged with comments from "knowledgeable" Instagrammers, but lets not digress.
Put yourself in the shoes of a millionaire who's listening in on a hot-shot young boy who thinks he's got the world figured out. Not only does he believe he will revolutionize the world, he's so confident that he hasn't tested the idea himself, and is now asking for a large sum of money for a percentage of the imaginary firm. The only assurance the millionaire investor has in knowing that this venture will reap any reward is a child's word, which is of little value irregardless of how good his business plan may be.
In my eyes, investors such as these want good management. To have good management you must have proven yourself under strenuous circumstances. And without past sales, what kind of strenuous circumstances has one faced? Secondly, investors will probably be looking for consistency in past sales. A large spike in sales from a one-time contract won't impress anyone, you need a model that can coast and has substantially more upside than downside.
Unless you're Julian Marchese, you will undoubtedly fail amongst the Sharks and Dragons when you pitch an imaginary idea with self perceived lucrative potential.
Then again, I'm just a kid myself who knows next to nothing.