startup feedback
listen, learn and move on
Hey there,
Dragos here, from Project Arrow, where we guide founders with what to do and who to talk to in order to get funded.
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Raising money from investors requires talking to a lot of them. It is a numbers game - the more investors you talk to, the better the chances for you to get funded.
Conventional wisdom says that the ratio is 100 meetings for one investor to write a check. That is a lot, but the good part of this process is that you get feedback - on your startup, on your sales process and on yourself. And while it is easy to take that feedback personally, most of the time it is not, investors have many reasons to say no. Here’s how it’s usually going:
you had a bad day - you did a bad pitch, not properly prepared, bad luck, poor deck, not enough materials etc. Shit happens and you move on, you already know what to improve and will be better prepared next time.
you had an ok pitch but you didn’t connect and the other party was not interested - it may not be a fit, maybe no chemistry, maybe some other stuff. You ask for feedback, thank for the meeting and move on.
you had a good pitch and people in the meeting seemed connected but got no followup meeting. It’s either a polite note saying they moved on, or, in some cases, you will also get an explanation for not going further with your case.
you had a great pitch and also got another meeting. That’s what you were aiming for, be prepared for a much more detailed discussion on the follow up.
In any of those cases, you get the chance to get feedback on how you can be better next time. Besides getting a next meeting, that should be your top objective. Maybe some questions you were not prepared for? Maybe a different way of perceiving the market? Maybe a different strategy angle? Maybe a new set of competitors you never heard of? Your job is to be perceptive on how investors analyse your case, because all the others are likely following the same pattern with a different set of eyes.
The point is that you collect valuable data points that you incorporate in your market research - that’s your navigation map for building the company. Talking to investors is yet another sales process to a specific customer segment, which more often than not don’t understand what you do. Their mindset is theory applied to other investment cases they have seen, often missing the fact that each company and its trajectory are unique. Here’s an example of feedback you may get:
Investor: Your company is in a crowded category. We want to invest in n-of-1 companies.
Same Investor: Your company is too different from anything we’ve seen. We want to be able to pattern match.
What do you do with with this kind of contradictory feedback? You can only argue politely your case to some degree and challenge assumptions, right? But the truth is that there’s nothing you can do about it. You don’t have a problem, the investor has a problem - and that is conviction. If you have an investable business, you need believers, not paper crunchers and trend followers, you just hope you have made your case clearly, and move on to the next. Your job is not to tell the investors are wrong (THEY will take that personally), it’s to tell them they’re missing out.
Remember, you only need to find one guy believing in you, who will give you a term sheet. For getting there, you need to deal with a lot of adversity and negative feedback. It’s how the raising VC business is done - move on fast, extract the essentials and be better for the next one.
Investor preparations and meeting simulations is what we do at Project Arrow with a bunch of founders every day. If you need help on how to deal with them, give it a try.
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