Two types of pitch advice I often hear are either “tell a great story” or “show your data”. The problem is, those two things get treated like they’re separate. Like, you have to choose which one you lean into.

But that framing is off. Story and data aren’t in opposition; they’re connected. And if you don’t get how they work together, you’re going to miss the point of what fundraising really is.

I’ve been thinking about this a lot lately, especially after a question I got in a recent interview, and I figured I’d lay it out directly. I’m convinced most founders don’t REALLY understand why data is important when raising capital.

You probably are part of that confused group…

Investing is About What Comes Next

I know what you’ll say, “Of course I understand. You need to clearly demonstrate the progress you’ve made, and data does that objectively.” This is the misunderstanding most founders have, and it’s what led to the question I got asked in an interview: “How do you balance storytelling and data in a pitch?”

Founders believe the importance of data when fundraising is describing what the company is today.

But that’s a narrow view, one that misses how investors actually think.

Investing isn’t about what your company is today. Investing is putting money towards a bet on an uncertain future. So when considering how you use data when fundraising, remember that your job is to convince investors of an exciting opportunity that has yet to come true. No matter if you’re raising a pre-seed round with zero data or raising a Series C with years of cohort data, you need an investor to believe in a future scenario.

Data Should Fit the Story, Not the Other Way Around

What does that mean in practice?

My belief is that metrics and data are a part of storytelling, so it's less of a question about balancing and more a question of adding all worthwhile pieces of a story. Essentially, if there are metrics or data that are key to the exciting story that you're trying to tell, then they should all be included.

Founders can hear the advice of including data and assume that they should include whatever data they can find just to satisfy that requirement.

The reality is you shouldn't include metrics or data just for the sake of including metrics and data. If they are a non-factor in your story, then don't include them. If they represent something negative in your company, don't include them. What we're trying to do is tell the most compelling story that fits your vision.

And by the way, if the data that you do have conclusively tells an unexciting story, if the data is contrary to what you want the story to be, if you can’t find any angle that effectively tells an exciting story of the future, well then… the answer might be that you’re not ready to raise or don’t deserve to be funded RIGHT NOW (not forever).

How Limited Data Tells the Right Story

As you try to incorporate data into your own story, consider how data is used to investors' advantages.

When investors develop focus areas for their funds, they are trying to find ways to identify winners earlier than others. They’re looking for signals that generalists may overlook. One way to do that is with nuanced metrics that might reveal a spark that could become a flame.

I saw this in action while supporting a founder through the early parts of a pre-seed raise. He had a product in the market, but the numbers were still small, hundreds of MAUs. The data didn’t mean anything to most investors. It seemed too small. But a couple of funds that focused on marketplaces understood that retention and avg spend metrics, even at that size, were an excellent sign. By no means did it ensure success, but it was enough to represent a future-looking story worth betting on.

Start With the Story You Actually Believe

Do you know what story you’re trying to tell? What future do you believe is coming? This is a story you not only want investors to believe, but it’s a story that you need to believe. Outline that story and work towards the data that makes that story compelling. The two together are what will help you build an exciting company and attract excited investors.

If you’re prepping for a raise, don’t start by asking, “What numbers should I show?” Start with the story you want someone to believe. Then ask, “What signals do I have—or can I get—that make that story feel possible?”

That’s how you use data the right way. Not as proof, but as momentum.

Be chased,
Jason