Investor to Startup: 12 Responses That Equal Rejection

Some time ago I was looking for an investor for one of my startup ventures.  After 8 months of preparing and giving pitches to what felts like 1,000 investors, I was able to secure private funding.  But in retrospect, I learned more valuable lessons from the funding journey than anything else.  Along the way, I connected with a number of other aspiring startup CEO’s and compared notes with them.  Here are 12 common rejection comments we received from investors.

  1. “We don’t have a read on this market yet.”
  2. We need to monitor the performance in this sector before making a commitment.”
  3. “It’s just not the right time.”
  4. We’re not sure if your niche will have broad enough appeal to monetize.”
  5. My partners can’t commit right now.”
  6. I’m going to introduce you to some of my colleagues who can explore this idea further.”
  7. This concept is in competition with another of our holdings.”
  8. “We would feel more comfortable committing if you had a lead investor on board.”
  9. “We would invest if you were located locally.”
  10. “We’re unsure of your structure.”
  11. “We have fully committed funds in this area already.”
  12. “It’s just not a good fit for us.”

One common theme among investors is aversion to risk.  You know that no great startup got off the ground without taking some risk — and so do they.  Address risk right up front in your pitch to investors.  Show them you did your homework and understand their concerns.  Then, quickly shift the focus to the potential for explosive growth, which tips the risk-reward ratio in your favor.

You will frequently hear investors use the words “unsure” and “can’t commit”.  And it’s beginning to sound like a dating venture.  Perhaps your potential investors are not comfortable because you weren’t specific enough about the benefits of your proposal.  Or perhaps it really just isn’t the right time or the right market for the type of investors you are targeting.  Either way, take the time to study your approach carefully and make corrections for your next pitch.

Investors use  a variety of rejection phrases after you’ve given the big pitch, and what you learn from those experiences is the best preparation you could get to land the next big investor.  Know your business like the back of your hand.  Then get to know your competition like the back of your other hand.  Know your biggest limitations, work hard every day to overcome them and you will succeed.

“Talent is a dreadfully cheap commodity, cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work and study.” -Stephen King

Shane Barker is a digital marketing consultant who specializes in sales funnels, targeted traffic, and website conversions. He has consulted with Fortune 500 companies, influencers with digital products, and a number of A-List celebrities.

2 Comments

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  2. John M 28-02-2013 at 6:19 pm - Reply

    I have begun to invest additional sums from my savings. My hard work has lead to a crossroad I cannot stop or run the risk of losing momentum.
    This will redirect the finance plan to a self-funding alternative from future LOI orders to $7.5M. A commodity service business that has client funding to $2.5 from a local bank.

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