What to do when investors say no?
turning noes into yeses
Hey,
Dragos here, from Project Arrow, where we mentor founders about how to build from 0 to 1 and get their startups investable in the process.
Let’s talk about how to take negative feedback from investors. Getting a no, that is. TL;DR:
don’t take it personal, it’s just business
it’s saving you a great deal of time
always follow up and learn from it
build relationships
Don’t and never take it personally!
Dealing with investors is never personal - it’s just relation based on a transaction where you sell equity for money and, in some cases, business advice. Investors’ job is to evaluate constantly multiple startup opportunities and to decide which are the more profitable to them. Being turned down means i) your startup case was not a good fit with the investors business and/or ii) your sales pitch was not compelling enough. None of these is personal - you need to understand and improve in either case all the time anyways.
A no is a data point
Getting an answer, even though negative, is a very important piece of information. You can now cross the investors’s name off the leads list and move on with your fundraising process. As a side note, you should appreciate this kind of investors as they save you time - saying no quickly shows they respect your efforts, and it’s a signal of somebody who is a professional.
Always follow up!
If the answer is a blunt no, you can ask for a little feedback. Is it a bad fit? Is it not a good time? Is it the lack of traction? Is the market too small? Any actionable data point you will get, you add it into your fundraising process and improve your materials.
In case you have that feedback, and you like the investor, you can ask to keep them updated with your progress. Should you progress along their feedback, you can always follow up with a short recap about your startup progress. And do that!
If the answer is ambiguous and/or non-committal, that’s a no.
If you don’t get your email answered i.e. being ghosted - that’s also a no. You can however, follow up with a reminder, but just once - sometimes people are busy and forget stuff. More than once is just being insistent, and not really professional. It’s their loss, let’s just put it this way.
Keep in mind
Always be respectful, timely and to the point - move fast and communicate exactly the way you’re expecting to be treated by the other side. The more leads you interact with, the more likely you’ll improve your odds of success, it is a numbers game. If you’re professional and respect the rules of the game, there is even a chance to turn a no into a yes.
Not least important
Know who you are, understand what you stand for and where you go in the future. The way you take no for an answer is part of your ethos. If you are capable of expressing it very clearly and professionally, investors will respect that and remember you. If your story is compelling, they’ll want to know more. The ones who will invest in you are usually like-minded people - the ones from your tribe. And you don’t run into those every day.
How do you deal with negative feedback? Hit reply and share your story!
- Dragos
PS. Tomorrow night we’re doing office hours for the Project Arrow members and next week we have a pitch practice session. Let me know if you’re interested.