Getting investors to trust you when you don’t have a track record can seem like an impossible task, but in reality, it’s quite possible. Having no track record could mean you haven’t launched a successful product before, haven’t secured significant investment, or haven’t demonstrated consistent revenue growth.
For investors, a track record offers tangible evidence of a team’s capabilities, their ability to execute, and the market’s receptiveness to their offerings. Without it, investors might perceive a higher risk. However, with thorough planning, accompanied by the right approach, even new entrepreneurs can build investor trust.
Additionally, you need to know what kind of investor to approach and how to relay your story to them in the best possible way. Here, we will equip you with the necessary tips on how to build investor trust, even with no track record.
1. Lay Down the Basics
Make sure you have all your business documents in order and that your business is registered and compliant. Another important aspect is to ensure that you have a business plan. This is one of the most crucial elements in guiding your venture to new heights and showing investors that you run an organised and intentional business.
Your business plan should not just be a templated document. Investors will expect it to reflect how well you understand your market, your customer, and your cost structure. It should answer: What problem are you solving? Who are you solving it for? And how will your business scale?
For additional trust points, ensure you’re tax compliant and up-to-date with filings like your CIPC annual returns and any required sector-specific licences. These details may seem minor, but for investors, they are the first line of due diligence.
2. Find the Right Kind of Investor Before Building Trust
There are different types of investors, and one of the elements that differentiates them is their goals. If your business doesn’t have a track record, consider approaching angel investors, as they typically invest in businesses that are in the early stages of growth.
Angel investors often care about potential and passion. They’ve likely been entrepreneurs themselves and understand the unpredictable nature of starting up. But don’t just rely on their goodwill. Do your research to find those aligned with your industry or who have a history of backing pre-revenue ventures.
Consider also impact investors, who may prioritise purpose-driven outcomes alongside profit, especially in emerging markets like South Africa. This kind of alignment can offset the absence of financial history if your business is solving a real, urgent issue in society.
3. Speak the Investor’s Language
Angel investors tend to base their investment decisions on personal values and interests. Before pitching to investors, find out where your goals and theirs overlap. Make sure you convey that alignment authentically.
For instance, if you’re pitching to an investor with a strong fintech background, highlight how your solution fits within the future of finance or closes a gap in financial inclusion. Use metrics — even if they’re early signals like app downloads, customer feedback, or pilot uptake — to validate your potential.
4. Offer Tangible Proof of Concept to Build Investor Trust
When you have no prior performance metrics, shift the focus to what can be validated, like a proof of concept, a working prototype, or customer testimonials. Even a small pilot or beta launch can go a long way in proving that your idea isn’t just theory.
Some early-stage businesses overlook the power of validation through traction. This doesn’t need to be sales. It could be pre-orders, user sign-ups, waitlists, or letters of intent from prospective clients or partners.
You need to demonstrate that people outside your circle see value in what you’re doing.
5. Show That You Understand Risk
Don’t be afraid to initiate the conversation around risk. Don’t wait for the investor to ask. Proactively show you understand and have a plan on how to manage risks in your model and how you plan to manage or reduce them.
Whether it’s supplier dependency, regulatory changes, or customer acquisition costs, being upfront builds trust. It tells an investor, “I know what I’m getting into, and I have a plan.”
Additionally, make it clear how you will use the investment. The more specific and lean your funding use case, the more confident an investor will be that you’re not throwing money at an untested idea.
