“No, I Will Not Fund Your Company”
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that sometimes it actually isn’t rejection as much as it is circumstance. The fund may not have money, may focus on another industry or another deal stage, or it may just be holding remaining funds for follow-on investment. Regardless of circumstance, there is still an opportunity to get feedback. Your job is to make it as easy as possible for the VC. A few ideas:
- Find comparable companies in the portfolio and ask the VC how she got comfortable with a challenge that both your company and that company face.
- Share a milestone that you have in mind to prove that you can and will overcome a primary concern and ask if reaching that milestone might alley their fears.
- Invite candor: “We came to you because of your reputation for building great companies in our industry—your feedback would mean a great deal to us.”
Ask for help
Many of us approach conversations with potential investors with one purpose: to get money. This approach is foolishly short-sighted. Many VC’s are business savvy and well connected. Regardless of whether or not a VC is going to give you money, she can give you advice and introductions. The list of help you can ask for is limitless, but some examples include:
- Introductions to good talent or brand name advisors
- Suggestions regarding funds or angels that may be interested
- Business development leads
- Introductions to related companies in their portfolio
When the conversation is winding down, establish a point for re-engagement. It is best to have the VC set the parameters for such a conversation, as this will provide insight into her thinking and increase your odds of actually getting a follow up meeting.
Make yourself useful
VC firms need lots of help. They are often thinly staffed, short on research tools and time. You can gain big points by making yourself useful. For example, a VC will appreciate it tremendously if you introduce her to a compelling new company (that fits her fund’s strategy), provide industry perspective for her due diligence, introduce her to a great lawyer, the leader of an entrepreneurial organization, a pioneering professor, etc.
Helping a VC is a means by which to work with her before she actually funds you. You can demonstrate passion, competence, and the power of your network. Most importantly, there is no better way to establish a foundation for a relationship that may just last for years.
Every entrepreneur will hear the dreaded phrase: “No, I will not fund your company.” The real question is: what will you do to walk out of the room in a better position than you were when you came? Hopefully you will use some of the suggestions above. At the least, I hope you realize that there is opportunity in every rejection.
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