In most cases, while investing in any business, you should have a safe, de-risked plan. That’s how you would normally invest.
If someone comes to you and says:
1. There’s a 70% chance the company will fail and you’ll lose your money.
2. I couldn’t deliver before, but I want you to invest because I’m building something big. If this succeeds, you’ll make a lot.
3. I’ve invested all my money, we’re about to fail, and I need your investment. If we succeed, it will revolutionize the industry.
That's a red flag. Right?
But here’s the reality:
1 was Jeff Bezos
2 was Jensen Huang
3 was Elon Musk
They all faced massive risks and still got investors.
So, there comes a time in every investor’s life when they realize that looking at a founder’s conviction is a far better investment than a safe bet.
These are the rare fishes, the founders who tell you the truth but have already invested all their time, energy, and resources due to conviction.