Growth5 Blog

Monday, August 17, 2009

Capital Raise Rejection: You're On Your Way

If you're out there raising money, you're going to get rejected, a lot. You know that, many of you are living it. It's what you do with the rejection that is important.

Getting a "no" from any investor -- family/friends, Angels, VCs, Private Equity, Institutions -- can be deflating. "They don't like me, they don't like my idea, this is never going to work."

You need to realize that oftentimes your rejection has very little to do with you or your idea. It could be that you're not in the right industry for that investor, you're in the wrong geography for them, you're not in their sweet spot as far as the stage of your business or most likely it's just not the right timing.

When you get a "no" use it to your advantage:

1. Try to find out why. Some investors will tell you, some won't. Approach the investor for the sole purpose of feedback - don't come across as if you're trying to change their mind, again. Whatever helpful feedback they give will better prepare you for your next presentation. If you use this feedback properly, you're more likely to have answers in your next presentation before the investor even asks.

2. Ask the investor if you can keep them posted on your progress, then update them when you actually have progress. Investors talk to each other (see #3). Even if after two or three quarters of updates you don't hear back from that specific investor, they may forward you on to someone in their network who might be interested.

3. Ask the investor if they know of another Angel or VC that your business might be a better fit for. This might be the most valuable information a "no" can give you. Investors know other investors, they know what kind of deals they're doing. A "no" investor just might be a link to your "yes" so don't forget to ask.

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