Learning from No
October 18, 2016 | By Aaron Terwey
Hearing ‘no’ from an investor doesn’t end the conversation; it pivots the conversation. If you’ve ever embarked on a round of funding, even a simple friends and family round, chances are you’ve heard some form of “no” more than you’d like. If the first, second, or even thirty-eighth “no” didn’t completely derail your efforts and send you spiraling into the depths of self-doubt, congratulations, you might just make it as an entrepreneur after all!
One of the hardest things for a founder to hear and accept is that a potential investor doesn’t think that his company, his baby, if you will, something for which he has sacrificed his time, energy, money, and sleep, is worth investing in.
So, what do you do when a potential investor says no? How do you turn that rejection into something positive? Does that end the conversation? No, it pivots the conversation. Now, rather than seeking money from this potential investor, you’re seeking feedback, which is significantly easier to get than money. Why doesn’t she like your idea? What holes does she see in your plan? How can you tweak your business model, plan, strategy, etc. to make it more appealing to her?
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Let me be clear, this shouldn’t be interpreted to suggest that you should beg her once she’s made her decision or offer to implement every change she suggests in hopes that she might change her mind. Rather, you should use these rejections as learning opportunities, treat the feedback like the valuable data points that they are, discuss the suggestions with your advisors, selectively implement those changes that you and your team decide should be implemented, and then, maybe, those potential investors who had previously said no will be clamoring to invest.
We tell clients to begin conversations with potential investors well before they’re raising money for a couple of reasons: first, it’s much easier to begin a dialogue with a potential investor when you’re not asking for money; second, to generate feedback, identify issues, and to address those issues before they can grow into a “no” during a pitch meeting. However, when you inevitably get a “no”, make sure you learn from it.