As a founder, learning to effectively manage rejection is tough – whether it’s in your personal life or business life, few of us like to be rejected. Nonetheless, the fact of the matter is that getting rejected is part of life. We all get rejected from time-to-time but as an entrepreneur seeking funding, learning to effectively manage rejection is an essential skill.
While dealing with rejection of any sort can be super tough, being rejected by a potential investor or funder can be particularly devastating and difficult to manage. Why is this? Common feelings when being rejected either personally or professionally may include:
- Feelings of Inadequacy
Any entrepreneur or founder whom I’ve ever met and is serious about making their dream of launching and growing a successful startup really throws their heart and soul into making that a reality. For them, funder rejection can be particularly painful and tough to manage. But entrepreneurs who cannot learn to manage rejection rarely get the funding they seek.
When rejected by a potential investor of funder, we tend to take it personally and a reflection of ourselves. In other words, we take it as a personal failure or that we have a bad business model, or even worse, our idea is just plain bad. But that is not the way to effectively manage rejection. Falling back to this approach is not only pointless, but create a cycle of negatively that makes recovery and moving forward in the funding process even slower, or more difficult.
Often times, we are certain this is the right funder or investor. When dealing with non-dilutive funding sources such as government grants or other non-traditional funding instruments, I’ve even spoken to founders who have already allocated the funds into their revenue projects.
The number of investor meetings it takes to fund your startup can vary wildly. Some will be successful early on while for others, it can take a while. On average, I believe the number of investor meetings it takes to receive that very first bit of angel of VC funding ranges from 100 to about 140. However, for one guy, it took 400 meetings!
But if you’re serious about getting funding, you shouldn’t let numbers like that discourage you. These are other people’s stories – not yours! Just like when working out or life in general, you should never compare yourself to others because every situation is different.
Learn to Effectively Manage Rejection: Five Essential Tips
Even though it took him about 10,000 tries to get the light bulb right, Thomas Edison is quoted as saying “I have not failed: I have just found 10,000 ways that don’t work.” While this is not outright rejection, there are many similarities that make this example relevant to entrepreneurs seeking funding.
Other famous or well-known folks who faced serious rejection or failure before finally finding great success include:
- Abraham Lincoln;
- Winston Churchill;
- Albert Einstein; and
- Henry Ford, among many others.
What was the secret formula these folks used to use rejection to their advantage and achieve success? Here are a few of my favorite tips to effectively manage rejection and use it to your advantage and get the funding you need.
- Don’t Take it Personally: If an investor or funder rejects your pitch or funding proposal, not taking the rejection personally is the first and most important step you can take to effectively manage rejection of your startup, business idea or project. More often than not, funders or investors reject pitches or proposals because they’re just not a fit for their current priorities. Rejection of your pitch does not mean they are rejecting you. Taking it personally does you no good and in fact, just sets you back. Instead, accept the rejection, follow the rest of the steps below and move on.
- Don’t Get Discouraged or Be Emotional: Don’t let rejection of your funding pitch or proposal get you down. Just like taking rejection personally, getting depressed or disheartened creates a downward spiral that gets you nowhere. Moreover, don’t get angry at the investor or funder because they said no to your pitch or proposal. Getting offended by rejection can cause you to say things to a target that might come back to haunt you later on, damaging your prospects for future funding. Remember that a lot of investors, funders and funding agencies know one another through conferences and networking events. They often talk to one another so you don’t want to develop a bad reputation.
- Be 100% Certain Your Pitch Was a Fit: As an angel investor and person who regularly reviews pitches and funding proposals as part of my day-to-day business, I often wonder “Why did this person bother sending this to me? It is not even remotely aligned to anything I’ve done before or to the funding priorities specified.” Seriously, if your startup or project is not fully aligned to your target’s past track record or stated priorities, then don’t bother sending the pitch or proposal. Investors and funds have funding priorities for a reason – it saves them time and it saves you from wasting time developing and sending pitches or proposals that aren’t aligned to your target’s priorities.
- Learn From the Rejection: Sometimes when your pitch or proposal is rejected, the prospect will give you feedback as to why they said no. If they do, take this as a valuable opportunity to improve your pitch or proposal the next time around. If they don’t or are unwilling to provide feedback, ask your peers to read your proposal or pitch and give you their honest feedback. It’s best that you don’t ask friends unless you can be sure they’re going to give you honest, critical feedback. Make a list of points that might have caused your pitch or proposal to be rejected and move on to step 5.
- Engage in Continuous Improvement: Every time your pitch or proposal is rejected, take whatever feedback or constructive criticism you receive and use it to improve your approach. When I review pitches or funding proposals that don’t meet my approval criteria for any reason, I always include not only strengths and weaknesses, but thoughts about how they might improve their approach next time around. If you are fortunate enough to have someone give honest, critical feedback about your pitch, then take advantage of the opportunity and use their critiques to improve your pitch! If you are pitching to a lot of people you may be getting a lot of different feedback, some of which may seem contradictory. Remember that you can’t please everyone so in some cases, you will have to pick, choose and prioritize relevant feedback based on your circumstances.
In all cases, when someone rejects your pitch or proposal for any reason whatsoever, always handle the situation with dignity and be polite. This is a key step in learning to effectively manage rejection as a founder. Remember that no may just mean no for now, not forever.
You never want to burn bridges by acting with indignation, anger or arguing the logic of the rejection. Be an adult about it, thank them for their time and ask if you can send them updates about your progress. Using this approach, your target may be interested in providing capital further down the road.
Interested in learning specific steps you can take to minimize the likelihood that your pitch or funding proposal will be rejected? Contact me today and let’s talk! I’ve helped my clients secure over $400 million in funding. Maybe I can help you too!