Youβre reading an excerpt of Angel Investing: Start to Finish, a book by Joe Wallin and Pete Baltaxe. It is the most comprehensive practical and legal guide available, written to help investors and entrepreneurs avoid making expensive mistakes. Purchase the book to support the authors and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
βexampleβPete once got excited about a company that claimed to have 85K customers. This was a consumer and small business product. After a few probing questions, it became clear that these βcustomersβ were acquired when the companyβs product was an add-on to a large ecosystem. These customers were on a free tier of the product, and the company determined that it could not monetize them, so it pivoted to a different value proposition. Entrepreneurs know how important customer traction is to investors, so the pressure to present numbers in a positive light can be extreme.