“No, I Will Not Fund Your Company”

If you are an entrepreneur and you haven’t heard the phrase above, then you probably got one of the following: “why don’t you come back when you have more traction;” “this just isn’t for us;” or (my least favorite), “this looks like a solid double…we only take home runs.”

I do some work for LaunchCapital, a seed stage venture fund headquartered in Cambridge, MA, and have had to break the news to some entrepreneurs. It is not easy to say “no,” and it can be even more difficult to give candid feedback. After all, you risk sounding arrogant and it can invite unwanted debate from an entrepreneur who is (understandably) passionate about his or her company.

I have also had the opportunity to work with several early stage ventures to help with fundraising. When I start working with a company, I state the obvious: “the only certainty ahead is rejection.” The danger is that a) you will get dejected and quit or b) you will miss key opportunities to pick up value during the fundraising process. Below are some suggestions to avoid these pitfalls.

Stay Positive

Every day you read sites like Xconomy.com that run stories like this: an alternative energy firm (not yours) raised $8M from a big name VC (who wouldn’t take your call), to pursue the market opportunity that you identified (almost a year ago now). Yet, you never read about the hundreds of companies that do not get funded or that raise less than they want to. According to the Entrepreneur’s Census (www.bit.ly/entrecensus), a not-for-profit study that I founded last year, 70 percent of respondents raised less funding than hoped. In the face of long odds and many rejections, it is vital to remain upbeat. Here are some suggestions:

Understand why you got rejected

With a game plan and a support mechanism in place, it will be much easier to positively process rejection. You may be relieved to find out … Next Page »

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