The fact that name dropping is a bad idea should go without saying, but some entrepreneurs have proven the need for this post.

When you are presenting your business idea it's a bad idea to rely too heavily on the opinions that big name people will validate the quality of your business. In other words, don't expect to sell the merits of your idea simply based on the opinion of a third party. Statements like "Bill Gates loves what I'm doing" are not very effective for a few reasons:

1. It raises questions about why Bill isn't backing you,
2. It sounds like a petty attempt to cover up the weaknesses of your
   plan, and
3. It sounds tacky, making people think that you are bad to be around.

That said having the support of industry experts is a relevant factor for VCs to know. However instead of demonstrating this through a quote, get them to join your advisory board or invest in your company. That's a real sign of faith.

Focus on explaining the merits of your business - those factors will peak louder than any names you can drop.

Comments

[Shanti Braford]

Name droppers are the worst. It's the equivalent of computer geeks saying they have some really hot model girlfriend, who they met online & just happens to live 5 states over.

What's your take on "patent pending" ? When I hear that my eyes start to glaze over, especially if the technology is far from revolutionary.

[David Scott Lewis (Zytech Solar, a Going Green 100 Winner)]

This might be a great thread for a lot of open discussion.

So, which sources do YOU recommend as credibility-enhancing for a start-up? Don't say "paying customers"; that's obvious. ;-)

How about commenting on the following:

* Patent pending (as noted by Shanti)
* SBIR Phase I or II funded
* Credible entities on a corporate Advisory Board (and if so, does this mean corporate and/or academic types?)
* Published papers (although would you use bibliometrics to "prove" that a paper is truly significant?)
* Press coverage (not just press releases; any idiot can use a press release distribution service; I'm referring to editorial coverage)
* Industry awards (like our Going Green 100 award, one of only about 20 solar sector companies to receive this honor)
* A certain level of sales
* A certain level of profits (and which is more important, EBITDA or net profits? [Note: Foreign firms, like ours, may have an advantage with net due to tax breaks; in essence, operating profits = net profits.])
* An established distributor network, systems integrators, whichever may be most appropriate

Add more. And I'd like to see your comments.

This kind of information/feedback is invaluable to many start-ups. At Zytech, we consider ourselves a start-up because we've been in business less than two years, but we're at a $20 million run rate, although struggling with margins since we're continually reinvesting whatever we make into new manufacturing capabilities. We're not quite yet another Facebook widget company: We make real product -- yes, solar modules (panels) and collectors (for water heating) are real products with a 20+ year lifespan. (I doubt most Facebook widgets will last more than a few years ... at best.)

Looking forward to your response(s). I'd even like the Facebook/Web 2.0 crowd to chime in, even though green tech and Web 2.0 have little in common.

[Mark Davis]

David,

Thanks for the suggestions. I have included many of the topics in the Table of Contents page of GV, which means that I will eventually address them. I am pacing my way through the list to give each topic the attention it deserves.

To see the future topics, scroll down on the homepage.

I added Shanti's question to the list awhile back and will be publising a post on the topic in the next few weeks.

Keep the good ideas coming...
--Mark

[Dmitry]

David, perhaps advertising your company on a blog like this is another thing that you should try to avoid. It just does not fit with the rest of your comments and sounds indeed a bit tacky ...

[David Scott Lewis]

Dmitry, it's tacky versus exposure. ;-)

[David Scott Lewis]

Dmitry, I'm not sure if you were referring to my long posted name (including my company and our Going Green 100 award), or the fact that I talked about my company in my comment.

Actually, I wanted to clarify as many things as possible and have Mark's response best address our situation.