Why did Naval state that 'trust determines whether capital follows you'?

Okay, that's a deep question. Naval's statement is like a golden rule in the startup and venture capital world. Let me explain it in plain terms.

Why does Naval say "Trust is what determines whether capital flows to you"?

Imagine the simplest scenario: You have two friends who both want to borrow money from you.

Friend A: This person has always been reliable, keeps their word, and acts responsibly. Although they've had setbacks before, they never make excuses. Instead, they honestly tell you what went wrong and how they'll improve next time.
Friend B: This person has many big ideas and talks a great game, but they often fail to follow through on their promises. They took a long time to repay a small loan you gave them last time and always complain that others or bad luck are to blame.

Who would you lend money to? Most people choose Friend A.

Why? Because you trust them. You believe they will treat your money seriously, do their utmost to succeed, and even if they fail, they'll tell you honestly instead of running off with the money.

Scaling up this simple logic to the world of investing and startups is the core meaning of Naval's statement.

1. What Capital Truly Fears Isn't Failure, but "Uncertainty" and "Betrayal"

Investors (the controllers of "capital") commit large sums of money to a founder—a massive gamble. They know that startups often fail; "9 out of 10 startups die."

Therefore, their biggest worries when evaluating a project aren't the project failing, but:

Will the founder cheat me? (Misuse the money or simply disappear).
Will the founder hide problems from me when things get tough? (Only telling me when it's too late).
Is the founder capable of executing their stated plan? (All talk, no action).

Trust is the antidote to these uncertainties.

If a founder has an excellent reputation in the industry, and everyone knows they possess:

Integrity: They mean what they say and will genuinely strive to do it.
Competence: Their track record proves they can get things done.
Transparency: They proactively communicate challenges with investors rather than hiding problems.

Then, for investors, while the project's risks remain, the "people risk" is significantly reduced. They are willing to give you money because they believe in you, believing you won't betray their trust. It's like buying "reliability insurance" for their investment.

2. Investing is Primarily Betting on the "Person," Secondarily on the "Idea"

The most brilliant idea, given to an unreliable person, is very likely to fail. An idea that looks mediocre, given to a supremely competent and reliable person, might be iterated, adjusted, and optimized into something successful through their execution.

Especially in early-stage investing, when the company has little to no data and only has a pitch deck and a few founders, investors are essentially 100% betting on the person. They're betting on the founder's ability to learn, execute, lead, and crucially—their character.

Your level of trustworthiness is the value tag attached to who you are. The brighter this tag, the more willing capital is to place its bets on you.

3. Trust Creates a "Compound Effect," Attracting Resources Actively

In the investing and startup worlds, reputation spreads.

If you successfully help an investor make money and the collaboration was smooth, they'll recommend you to their peers.
If your startup fails, but you gave it your all, were transparent with investors, and handled the winding up process fairly, investors will feel you "passed the character test." They might be willing to invest in your next venture.

This is the true meaning of what Naval calls "flows to you."

When your level of trustworthiness is sufficiently high, you stop being the one desperately chasing capital. Instead, capital actively seeks you, and opportunities find you. Because in their eyes, investing in you becomes a "lower-risk, potentially high-return" proposition. Your name itself becomes a trusted brand.

To Summarize

Essentially, Naval is telling us:

Your personal reputation is your most important asset.

Capital isn't just money; it includes connections, opportunities, and support.
Trust is your passport to acquiring all of this.
Instead of wasting time polishing smooth talk to raise funds, invest that time in genuinely becoming a trustworthy person.

When you make building trust a long-term, consistently practiced principle, you'll find that the resources you need will naturally gravitate towards you. That's the essence of "Trust is what determines whether capital flows to you."