To start and grow their firms, entrepreneurs need a lot of things from other people. They need funding from investors, skills and commitment from a founding team, approvals from regulators, collaboration from suppliers, and attention and demand from customers, among other things. But to unlock these, entrepreneurs must establish their legitimacy in the eyes of each of those resource-holders, or “audiences.” They have to show that they’re trustworthy, that they have a good product, and that they can take it to market. This effort is particularly challenging because each of these different audiences has its own criteria for what makes a venture legitimate.
3 Strategies to Convince People That Your Startup Is Legit
Projecting legitimacy helps you get buy-in from investors, customers, and other key stakeholders.
May 28, 2021
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Summary.
The approach of three new Chinese EV automakers demonstrates the value of legitimacy for venture building; these firms were able to reach volume production just two to four years after they were founded, compared to Tesla, who took 9 years. They raised nearly $7 billion in venture funding and all three were recently listed in the U.S. How did they do it? By implementing three actionable strategies to manage legitimacy to access the resources they need: leveraging existing sources of legitimacy, aligning actions with resource holders’ expectations, and redefining perceptions or assumptions held by resource holders.