Turn that no into a yes by using your investor pitch as a learning opportunity.
After days upon days of working on your pitch deck and practicing how to explain your product in the best salesperson voice, you still can’t get the “yes” you were so deeply vying for. Sure, this might put a hamper on your plans temporarily, but it shouldn’t hold you back from trying again.
Only 0.05% of startups are able to raise venture capital, which should tell you that succeeding in one go isn’t an easy feat. But, before you jump back into the field to look for investments, you need to think about what makes a good pitch. Here are some aspects to consider if you want to make the next pitch turn out in your favor.
How to handle pitch rejections?
Ask for feedback
An investor pitch is about more than just getting money; it’s also a learning opportunity for you and your budding company. Unless you ask an investor for genuine feedback at the end of a pitch, you might not get something more than a polite “no” from them. Use the constructive critique you receive in such situations to reanalyze your ideas. Moreover, asking for feedback makes you come across as teachable to the investor. Investors prefer to work with people who are ready to listen, instead of just sticking to what they think is best. Use their experience in business to your advantage by being open to learning and evolving.
Network with other entrepreneurs
Another way to learn how to get a positive response to your business pitch is by speaking to fellow entrepreneurs. Try to speak to entrepreneurs who have experienced rejection in the past and swap stories. Talking to them might give you an idea of what you are doing wrong and how you can fix it. Networking can also give you access to their resources through partnerships, joint ventures and client leads. You can form connections with fellow entrepreneurs by attending workshops and conferences within your industry space.
Separate a temporary “no” from a permanent one
There are different kinds of rejections that you can experience when you approach an investor. Some investors might see some issues or unmet criteria when they look at your pitch and need you to rectify those before they are willing to put their money into the project. Once you do, it is always possible to approach the same people again and get a more positive response.
It is also important that you don’t start losing faith the moment you see someone being uncertain about your idea. Try to make sure that prospective investors understand what you are trying to say by asking clarifying questions if they seem to be edging towards a no.
However, there can be situations where you do get a permanent no. For instance, an investor might say, “I only invest in the [xxx] sector and not in [your sector] companies.” Understanding the difference between these two very different kinds of rejections can help you approach investors who are the right fit for your project.
Reasons your pitch might be rejected
Leaving out employee information from your pitch
To avoid rejection in the future, it is crucial to know the preemptive signs that you might be making glaring errors in your pitch. One such error is not adding details of the team’s prior work experience into the pitch. The investor cares about your and your team’s knowledge of the field. In fact, sometimes, companies get acquired simply for the value, skill and competence of their team, as the investor could use this opportunity to cash out and even make a good premium for voting in favor of the acquisition. So, not highlighting them is neglecting a major asset of your company.
Positioning yourself as a disruptor
If you enter the pitching session with claims to be the next disruptive technology, chances are you might get rejected. The term “disruptive” is so overused to an extent that it has lost the charm that it originally held. In fact, the term might have even gained a negative connotation, with how Theranos founder Elizabeth Holmes used it to defraud investors.
Also, investing in disruptive innovation comes with a high chance of failure. Disruptive companies have to traverse uncharted territory, and your progress might not be as fast as something that already has a pre-established market. As a result, investors might be wary of putting their money into such projects.
Entering an already saturated market
On the other hand, investors are also averse to funding companies that enter the market too late. If the space already has a lot of successful businesses that could just as easily provide the same service or product you are pitching, it will be harder to convince investors. Some investors might even have companies with the same product/service offering on their portfolio and might not want to take on more of the same.
The most important thing to remember after being rejected is to not beat yourself up about it. Just take a look at the Founders of Google, Larry Page and Sergey Brin. In 1998, the two attempted to sell their PageRank system (the system based on which pages show up on Google) for US$1 million to Yahoo but got rejected. However, their failure didn’t stop them from becoming the most well-recognized businesspeople in the world. So, if you are facing rejection right now, realize that it is not always a bad thing. Not only can it help you learn what to do next time around, but it can also mean that destiny has more in store for you.
Also read:
- Pitching Tips That You Can Learn from Watching Shark Tank
- What Is the Best Advice for First Time Entrepreneurs in 2022?
- Exit Strategies for Startup Founders
- How to Sell Your Idea to Investors
- The Fall of Theranos and Lessons for Startups
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