How is believing in your product an excuse for not trying to minimise risk.
Especially if you know that most startups fail, there's no good reason not to hedge your bets when it comes to stuff that's at the base of the Maslow triangle.
edit: logic error :)
Would you agree that this would not be a good answer even if it is the reason?
Some gentler ways to answer:
- Keeping my house gives me a feeling of security so I can devote all time and energy to the startup.
- My heavily mortgaged house is not nearly enough to fund the startup.
- Keeping my house is not unreasonable when I am already investing an enormous amount of my time and energy and my life into this.
- I might indeed sell my house but I don't think I'll need to. I feel that this startup is a great investment, and I think investors will agree.
Anyone got a better response?
[1] http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs
I'm not trying to suggest this is right or wrong, simply that the cultural expectations are different.
I know I've read a post that summarised these types of differences but I can't recall where (I think it was either an Estonian or Slovenian startup).
I think this notion that you have to suck up to investors and tailor what you do to jump through their arbitrary hoops is toxic.
Focus on making your business so awesome that investors see value and can't resist the opportunity. Everything else is hand-waving and cargo-cult thinking.
Regarding cultural differences, in Croatia nearly everyone (over 30) owns their house or appartment; it is not customary to rent, and only students or those with no other choice do it. It's traditional that even young people enter 30-year property loans as soon as they get their first job; property is considered the only viable long-term investment.
People often seek some sort of security first, even young ones, and only then, perhaps, look to "play" with some kind of business idea, usually because it's fashionable and seems like it could be fun. So this question by the investors has the purpose to weed out such "fashion-followers" and find those really dedicated to their cause (it's not a silver bullet of course; it's one of a number of questions with the similar purpose). I don't know of any investors who would require that from their entrepreneurs.
Add a comment about how venture capital usually comes with advise and connections, and it's a perfect explanation.