At some point in our lives, everyone has experienced a form of rejection. Some forms are easier to deal with than others. Physical and social pain are actually not so different from each other. If you don’t believe me, ask Matthew D. Lieberman, author of Social: Why Our Brains Our Wired to Connect. A previous article from 2013 in The New York Times summarize his findings on the topic, “Lieberman says, ‘without knowing which was an analysis of physical pain and which was an analysis of social pain, you wouldn’t have been able to tell the difference.’” If you haven’t read Social, I suggest picking up a copy. With that in mind, it can be particularly gut wrenching when an investor rejects a business idea you have. You’ve spent countless hours and resources and strongly believe your product/service can make a difference in people’s lives.
The Startup Garage team has served as coaches to many entrepreneurs as they go through the agonizing experience of rejection by an investor. Here are a few tips we’ve uncovered that can serve as a guide when trying to overcome rejections from an investor.
1. A “No” Can Mean, “Not Now”. Having an investor decline funding your business can be a sign of many factors. It can, for instance, mean your idea is not as developed as other companies who are seeking the same investment are. This allows you to take a step back to better define either your product/service, target market, pricing, or other aspect of your company that needs to mature. By having the ability to overcome this obstacle, you will be better prepared pitch to the next investor and it will be much more refined.
2. What to do in the meantime. Be patient and reflect on what might need to change. This one is easier said than done, but patience can go a long way when overcoming rejection. It demonstrates your ability to stay the course and believe in the mission you set out to do from day one. Founders have a window to take in as much feedback as possible. Keep the conversation going with the investors if possible, show them your progress when appropriate and take advantage of the learning experience.
3. Practice. It has been said that it takes over 10,000 hours to master something. While some take more time and others less time, the takeaway here is that there is no real shortcut to mastery. By practicing your pitch with anyone who will listen, you are becoming a master at tailoring your presentation to your audience and getting more comfortable with your pitch. Pitch to both someone who is and isn’t well versed in your industry. They’ll be able to ask questions with a variety of perspective. You want to make sure that what you are actually selling is clearly understood.
4. Seek to Understand. Knowing what they DON’T want helps you get closer to showing them what they do want. This ties in to previous points made, however, it is crucial to stress the flexibility and understanding entrepreneurs must have in order to be successful and close funding.
Albert Einstein is quoted as saying ”Only one who devotes himself to a cause with his whole strength and soul can be a true master. For this reason mastery demands all of a person.” TSG has helped many entrepreneurs throughout the years go through the process of product development, business planning, consulting, and financial modeling. We understand the devotion put forth into their companies and share in their passion for sustainable growth. There is no easy way to deal with rejection from investors, but we feel is it not only part of the game, but a crucial part of developing your business that ultimately leads to innovation and mastery.
For more investor perspectives, join us for our Investor Insight Series on February 13th! We’ll gain valuable insight for you, the founder, from two local prominent investors, Amy Chang and Eric Gasser.
Some questions we’ll be answering:
What type of research can founders do before they reach out to you?
How do you meet most of the companies you date/invest in?
What do you need before going on the first date?
What is your ideal first date?
How/when should founders ask you out on a second date?
How to move from dating to going steady? (Due Dilegence)
How to know when/if you are the “one”?
CLICK HERE TO RSVP FOR THIS FREE EVENT!