If you are turned down when seeking capital funding, it can be discouraging and frustrating, but it’s important to remember that rejection is not necessarily a reflection of your business or idea.
There could be many reasons why your application was denied, such as a lack of collateral or credit history, the stage of your business, the market conditions, or even the investor’s personal preferences.
Let’s debrief a little bit about what’s happened and what they probably told you.
I liked your company, but my partners didn’t.
They say, “I liked your company, but my partners didn’t.” In other words, no. if this person truly believed in the project, he’d vouch for you and get this thing going.
If you get funding or a lead investor, we’ll follow.
If they say, “If you get funding or a lead investor, we’ll follow.” And what that really means is, once your first round of financing is completed by someone else, we’d be happy to give you more, but let someone else take the risk.
Show us some more traction, and we’ll invest.
They say, “Show us some more traction, and we’ll invest.” What that really means is, “I don’t want to say no, because you may land a large customer in the interim. But right now, I just don’t believe in it.”
We’d love to co-invest with other VC’s or other angels.
They say, “We’d love to co-invest with other VC’s or other angels.” What it really means is, if your deal was worthy of a VC, they’d want it all for themselves.
We love early-stage investing.
When they say, “We love early-stage investing.” What that probably means is a VC’s dream is to put one to two million dollars in a pre-money company and winding up owning 33% of the next Google. VCs aren’t that risky. They only want to invest in proven teams with proven technology in a proven market.
So, there you have it. We’ve heard it all before. These are typical responses when they say no. So, be prepared to hear any of these and take it with a grain of salt.
There’s always an investor to fund any deal. We just don’t want a capital seeker to shut down after the first one or two turn downs.
Here are some of the steps you can take if you are turned down when seeking capital funding:
Understand the reasons
Try to get feedback from the investor or lender as to why they denied your application. This feedback can be valuable in understanding what you need to improve or adjust in your pitch and business plan.
Re-evaluate your pitch and business plan
Look at your pitch and business plan objectively and try to identify areas that need improvement. Consider reaching out to other entrepreneurs, mentors, or industry experts for feedback and guidance.
Explore other funding options
If traditional sources of funding aren’t working out, consider alternative funding sources, such as crowdfunding, angel investors, or venture capital firms that specialize in your industry.
Keep networking
Attend industry events, join networking groups, and connect with potential investors and lenders. Building relationships can help you find the right partner for your business.
Keep persevering
Remember that rejection is a natural part of the funding process, and it doesn’t mean that your business isn’t viable or that you should give up. Keep working on your business and refining your pitch, and eventually, you may find the right partner to help you achieve your goals.
We can help re-purpose the deal and adjust it and turn that “no” into a “yes.” contact us