Bootstrapping your business: Your passion is undoubted. Your team is one of the best in town. You got the solutions beautifully delivered. You have a promising number of trial customers. During Venture Capital (VC) interviews: You did a great pitch and had great conversation exchanges with the investor.
But, they rejected you at the end, multiple times. How come?
Remember, unless you have come up with a "rocket science like” technology based product that is going to save the world, or you had several successful ventures prior to this project, there is a high chance of a “No”.
In this article, based on our experiences and researches, we will share with you some key takeaways on this scenario from our perspective.
➤ Dealing with the investment committee (IC).
Typically, a VC is founded and managed by its partners. And the partners will be the ones to review and make the final call to put money into a company, or not.
In Vietnam, for most of the times, an Associate or Analyst, or however they want to be called, will propose and justify for your startup to be invested.
Of course, they do not want to lose creditability in front of IC. Therefore, it is likely they will turn down unless they are super confident in your startup.
➤ Trust in the founders.
Never think VCs will only fund you and walk away, letting you do whatever you want. For most of VCs we have talked to, even during our exclusive event in July 2019 conducted with Cocoon Capital in Ho Chi Minh city, they see what lies between Investor and Founder is a crucial relationship which they are willing to spend a long time working on.
If there is no trust, we will hardly see a deal happen along the way.
➤ Data, data, data! And you did not nail it!
Don’t ever expect money right after you send VCs your pitch deck.
Prior to taking the case any further, Investment Associates/Analysts spend a lot of time doing due diligence. However, there is a good bunch of “blurry” zones in your business that they cannot, or do not have enough time, dig deeper in.
Thus, why not making their task a bit less stressful by providing as many data as possible to reflect the picture of your company: product roadmap, financial projections, historical customer and sales data, etc. This will help VCs saving effort to understand your market and how you might fit into it.
Obviously, they will still ask for references, talk to people who might have deeper insights, and do their own research. It’s their job, anyway.
➤ It’s just… We don’t feel right!
Making a call for investment, especially in early-stage startups where even the best DD does not guarantee successes, VCs will have to rely a lot on their own gut feeling and intuition.
That thin line of “Fear Of Missing Out” (FOMO) feeling and “I do not think that it is going to be the next-big-thing” could kicks in the investor’s mind and affect their decision.
Just remember, this is not your mistake. Different investors have different taste and level of risk acceptance. So take your time, think about how both sides can add value to each other’s success and be willing to share with your potentials investors, try to inspire each other.
➤ The “bitter truth”
It not strange that founders receive rejection from a VC with no reasons given.
For most people, providing challenging feedback can be so difficult. “We don’t want to hurt your feelings”, “Our feedback might be taken the wrong way”, “We don’t know the post-effects of our feedback” or simply “We don’t know how to give challenging feedbacks”.
Rather than providing constructive feedback, they just chose to be professional with a simple and straightforward response.
For any investment rejection, we encourage you to follow up with the investor for any types of feedback on your business so you will make it better the next time.
➤➤➤ There is nothing PERSONAL in a rejection.
Whenever you receive a rejection, remember that there are a lot more similar cases out there. Do not take it personally. Business is business. Success do not come easy. Rejection happens.
Try to practice active listening. Listen as much as you talk. A decent VC will be kind enough to share with you further on their objections and ideas to overcome.
We hope that you can observe rejections an opportunity. So many other founders did not make it that far to receive answers from VCs.
At VIISA, we always take the extra miles to support you accelerate your business at fast pace. Properly structure an investment deal or facilitating you on your fund raising plan are what we love to do. Join us and see for yourself, will you?
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