Rejection is one of the hardest parts of fundraising. As a founder, you’ll undoubtedly hear “no” far more than you’ll hear “yes,” and it can feel absolutely soul-crushing at times. As a serial entrepreneur, I’ve been rejected more times than I’d like to admit. Yet every rejection gave me an opportunity to get something else right the next time.
Once I knew what rejections offered me–a chance to course-correct and raise money faster–I looked to them as a means to strengthen my pitch and broaden my abilities. Here are five tips for using rejection as a tool to improve your fundraising skills (and ultimately raise a successful round!).
Tip #1: Find out why you were rejected
While I might not always like (or agree!) with what I hear, I ask for feedback after every rejection. Sometimes I’d get feedback on my pitching style or my team constellation, which I used to improve both things. Other times I’d find out I was pitching to the wrong people and had to revisit my target list. Point being, asking for feedback will help you improve your pitch and get to funding faster.
That said, not every investor is going to send you specific or detailed feedback. They may have passed on you because they simply had a bad gut feeling and nothing more. Or they don’t have the capacity to write detailed feedback. Don’t let this deter you from asking! If and when they oblige, always use their feedback for the sole purpose of improving your pitch–not to change their mind. This rarely, if ever, works and you’ll risk damaging your reputation by doing so.
Tip #2: If it’s not a “yes,” it’s still a “no”
This might come as a surprise, but not all rejections are straightforward. A special form of rejection is when an investor says they want to invest in your company, but they won’t lead the round. What this really means is they don’t have enough conviction in you and your company to take on what they perceive to be too big a risk.
To frame it another way, file this under “No, unless your deal turns out to be hot.”If you come across a situation like this, dig deeper to gauge their true interest level. Whenever this happened to me, I’d ask whether their company policy is to not lead rounds or if they opted against it for this specific deal. If it’s the latter, mark them as low priority in your investor CRM and move on to someone else.
Tip #3: Sometimes the best thing to do is hit pause
So, what happens if you’ve been fundraising for weeks without a single bite? If you’re consistently not meeting investor expectations, take a step back and reassess your situation. For example, are you acting on the right assumptions? Is your business actually ready or have you uncovered some significant gaps?
As your runway gets shorter and shorter, your deal grows equally colder (and investors have an uncanny knack for detecting desperation). Rather than plow further down an unsuccessful path, stop and think through your next moves. Revisit all your options for increasing runway before jumping back into the fundraising waters.
Tip #4: To get different results, do different things
In the words of Einstein, “Insanity is doing the same thing over and over and expecting different results.” After repeated rejections, you may need to spend more time vetting the basics of your pitch. So, go back to your key assumptions and prove them again. Do you have additional traction metrics you can use in your pitch? If so, add them to your slides as you refine and update other areas of your deck.
Also, think about giving your fundraising story a new spin. Consider if your story is truly compelling enough—or can you use previous feedback to iterate on it? Once you’ve looked at your entire pitch with fresh eyes, carefully scrutinize your targeted investor list, too. Are these investors still the right fit or are there others you should reach out to? Make sure you’re pitching to a new set of investors, not going back to those who previously passed on you.
For tip #5 and more insights from Max Fleitmann, watch his video interview and read the full blog post.
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