- If you've ever taken any sort of sales training, you've probably been told how to get past no. You've learned that when somebody says no, it's really just them inviting you to engage with them in a conversation or negotiation. That's not true when you're raising money from VCs. VCs say no all the time. As a founder, if you're engaged with the VC and the VC says no, trying to push past the no is usually pretty ineffective.
Instead, recognize that they're saying no to investing in your company now. In the future, depending on what progress you make, many VCs are willing to revisit your company and potentially invest in the company downstream. I was an early investor through founder group in a company called Fitbit. When I first looked at Fitbit, I wasn't really in a mindset to invest in the company. It was very young, I was on the phone talking to the CEO, I was in a rush, and it was a day that we had a huge snowstorm in Boulder.
So I was anxious about the snowstorm and I really didn't want to spend any time talking to James Park, who was the CEO, about his company. But I did it because I'd already set up the call and I felt like it. And whether my no was a good decision or bad decision is irrelevant, because what happened was I was gracious about saying no, James was gracious about hearing it, and not continuing to pursue me, even though two of his investors, who I knew very well, felt like I was a particularly good investor for that company. Because of how it was handled, nine months later, when the company went out to raise money again, those two investors were able to push on me to take a serious look and listen to my objections about it from that time where when I was honest about it, my response was, "You know what? "I just wasn't in a headspace to take "it seriously that day.
"I was too busy with other stuff." If, instead of being gracious about accepting the no, and moving on and continuing to focus on the business, and viewing it as a potential for a long-term relationship, James had stayed after me, and pestered me, and kept trying to push me to do something, I wouldn't have been interested in engaging with him. I would have been turned off and my shields would have gone up. This happens over and over again. And a really good investor will recognize that saying no to a company fits into a couple of different categories.
One category is no, I'm just not interested. Another category is no, I'm not interested but I'm happy to be helpful, if I can be. And then a third is, no, I'm not interested, I'm happy to be helpful, and no is not a no for now and maybe sometime in the future it could turn into a yes. So as a founder, recognize that you're actually trying to get your relationship with that investor into the second and third category, versus just the first category. The best way to live in that first category, is to badger the investor, try to argue with the investor.
Here's why saying no to me right now is wrong. It's not an effective strategy. But instead, just view that as a way to develop a relationship over a long period of time, as long as that investor is willing to do it. Finally, in a lot of cases, investors just aren't interested in what you're doing. And that's useful to know and useful to react to, again, in a sort of gracious and professional way. In those situations, you might be back to that investor three years later with a new business. And if you've handled the no in a professional way, being able to address that investor again in the future, is going to be something that's very possible.
Whereas if you'd said, sort of handled that no in a way where you just couldn't hear it, or kept after it, or turned off that investor, that's what that investor's going to remember three years from now when you spend time with them again. So listen carefully to what the no actually means when you're hearing it, and try, to the extent that you can, to start to build a relationship with that investor so you have an invitation to continue and engage, even if it's not relevant for the particular round of financing that you're doing today.
- Exploring potential stakeholders: friends, family, and more
- Finding a venture capital firm
- Breaking down the term sheet
- Taking on debt
- Asking for NDAs
- Accepting a no