What to do after a startup investor turns down your idea

Young Entrepreneur Council
Top 3 things entrepreneurs struggle with when communicating their ideas and stories

It is not the end of the world. Take away valuable lessons from the rejection

You have done all of your homework. You researched the investor you are pitching. You properly prepared your financials. You practiced and perfected your presentation. Most importantly, you landed a coveted meeting with your target investor. After the meeting is over, the investor passes on your idea. What do you do?

I work with founders and entrepreneurs regularly to prepare them for fundraising. It’s not just about putting together a good elevator pitch. When it comes time for a meeting, founders should make sure their pitch deck is clear and succinct. They need to have the proper financial statements assembled. And finally, they need to speak competently and confidently about the future of their business.

But even with proper preparations and a killer presentation, you may not be able to convince your target to buy in.

There are of course multiple reasons why an investor says no. Your offering may not align with their investment thesis. It could be that you are entering a saturated market. In the end, it could just be that they don’t believe in your idea. It happens. Don’t panic. Rather, prepare for this very scenario. Take these thoughts into account before entering every big meeting.

Don’t Take It Personally

You poured your heart and soul (and bank account) into this idea. It’s OK if you experience some shock when someone says they’re not interested. Remember to keep your cool. Take a moment, breathe in and offer up thanks for the time. Don’t start questioning the investor’s intentions or their know-how. Don’t show exasperation. Is it really worth burning a bridge? Of course not. Just about everyone who works in the venture funding space has at least one cautionary tale about a founder who let their emotions get the better of them in a pitch meeting.

Make Sure to Ask Questions

When you get your bearings, take a moment to ask a few questions to get some further insight about why they passed on your idea. Try to have a few questions already prepared before you even get into the meeting, but be sure to dive into any points that the investor presents that are still unclear to you.

Also Read: The slow but sure approach to starting your business

Unfortunately, you won’t have much time for any kind of real Q&A session with the investor after your pitch. You will need to think on your feet and ask the important questions first. Getting clarity can help going forward.

Request Referrals

Because your offering was not ideal for one investor, that does not necessarily rule out other potential investors. The venture capital community is a close one. Don’t be afraid to ask if the investor can make a warm introduction to another potential investor who could be interested in your idea. This is also a good reminder to leverage your service provider networks for investor introductions as well.

Keep Your Head Up

Don’t stay down for long. Get back to the drawing board and make any needed adjustments. Sit down with your co-founders and advisors, and take the time to review all of the feedback you received from your pitch meeting. We coach the companies we work with to expect multiple meetings before landing an investor.

Also Read: e27 Discussions, what are the worst mistakes that you have made when pitching to potential investors?

As founders, you have to treat the fundraising process much like a sales process. After all, you are selling part of your company to potential investors. And any salesperson worth their salt will tell you have you have to hear a lot of “no’s” before you’ll get a single “yes.”

True face-to-face interaction with an investor is hard to come by. With these tips, we have seen many startups make the most of a suboptimal result to get their company ready for the next pitch.

David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides early-stage companies with day-to-day transactional accounting, CFO service, tax, and valuation services and support. He’s a financial expert and startup mentor whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.

The Young Entrepreneur Council (YEC) is an invite-only organisation comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.

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