Young entrepreneurs: how do you demonstrate credibility when you have little experience?

If you are a new entrepreneur (with little experience working for someone else), how would you demonstrate your credibility to investors while pitching your business?

The team is one of the core things that an investor buys into. Which seems to put young entrepreneurs at a significant disadvantage.

Let's first look at a few groups of investors:

1. Friends and family -- this is pretty easy to demonstrate your credibility, unless of course you have lots of family drama. Just remember, although you may get credibility out of the gate, you may end up with some awkward holiday dinners if your venture fails (or if in later rounds, the early investors get wiped).
2. Angel - Savvy angels bet on the horse - that's you. They're looking for that raw passion and energy, not necessarily a resume a mile long. Many angels have particular skills that can help you grow in the years ahead. And, many older angels are in a phase of their lives where they want to give back. In fact, some angels are looking for this in particular because they have no kids to pass their wisdom/experience on to. These types of Angels are usually a mix between investor and patron. All of this is a long winded way of saying: Follow your passion. And when you talk to the right kind of investor and they see that passion, you're going to be just fine. Avoid hubris, go slow to move fast, and always be willing to learn something you don't know. Don't rush it and really be selective in the right kinds of investors for you.
3. VC - It is very difficult to get VC funding out of the gate, even for experienced founders. Even with customers & measurable market progress, VC funding is still very challenging.

The first step is to generate revenues with your new venture. That speaks beyond experience. Then target angels in your community. If you can't find them, try to find a center for entrepreneurial services in your community. You can also look at groups like Vistage and others that get entrepreneurs together in a group setting once per month.

Someone always knows someone who can help you.

Chris covers the typical parties which are considered investors, but there's another, often overlooked, party that can also be an investor - the Customer.

Convincing people to buy your product is another way of demonstrating credibility, either to other customers, or investors, or future founders/team.

So - how do you convince a customer to buy something from someone with no track record? Make a compelling business case and then remove all the major risks for them.

For example, if your potential client is worried about whether you can deliver, figure out how they will pay after you've delivered.

If they're worried about you going bankrupt and not having access to your product, figure out how to put it in escrow.

If you run software and they're worried about the data storage, offer to store it on their hardware. etc.