What to Do When Investors Turn You Down

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You are a business owner looking for funding. Maybe you are after that first round to fund a fledgling startup. Perhaps this is your second round. Either way, you have spent months preparing for the pitch. You have learned everything there is to know about your business. You’ve prepared an awesome pitch deck. Yet after 60 minutes with the sharks, you walk away with nothing more than advice you are not sure you can use.

Now what? Where do you go in the aftermath of rejection? That depends on what you are willing to do to keep your business moving forward. You could throw up your hands, walk away, and go get a job. Or you could keep fighting for an entrepreneurial idea you truly believe in.

Find Out Why

The first thing to do after a solid rejection is to find out what went wrong. Ask the investors to explain why they chose not to fund you. One distinct possibility is that they were not convinced their due diligence would support what you told them during your pitch. They do not want to put the time and effort into due diligence because they don’t think it will be worth it.

For the record, due diligence is almost a requirement for investors. Whether they do it in-house or contract with a company like Utah-based Mezy, the most successful investors will not spend a dime until they do it. You need to follow that lead. Do your own due diligence to find out why they balked. Leave no stone unturned.

Evaluate the Offered Advice

Any investor worth their salt will give you some sound advice even while rejecting your investment opportunity. Investors do this because, at their core, they want to see businesses succeed. When businesses succeed, so do their investments. So take their advice to heart. If nothing else, accept it as being genuine.

The idea here is to examine the value of the advice offered. In terms of value, look at what you want to accomplish. Maybe three of the five investors offered advice designed to get you to start thinking along more conventional lines. They advised you to change your pitch and rewrite your business model to align with industry standards more closely.

That’s fine if you want to do things the way every other company does. But if not, maybe their advice is motivation for you to seek a different kind of investor. You may evaluate their advice and decide that you would rather work with investors who think more like you. If that’s the case, you thank them for their time and you move on. You start looking for the types of investors whose attitudes more closely mirror your own.

Get Up and Try Again

The most important thing you can do after being rejected by investors is get up and try again. It is a lot like falling off a horse. If you don’t immediately get up and get back on the horse, you may find you are eventually too terrified to do so.

Understand that this particular group of investors is not the only game in town. There are other sources of angel and venture capital. There are also sources of funding that have nothing to do with professional investors. There are small business loans, peer-to-peer lending platforms, crowdfunding opportunities, and so forth.

Being rejected by investors is good motivation to step back and evaluate your enterprise. But it is not a reason to give up and quit. There is funding out there. You just have to keep working until you get your hands on it.