The Power of a Good No

Insights from my pitching journey with a focus on the rejection responses and how these rejection emails shaped our path forward and refined our pitch.?

A rejection email can be seen as a ‘blow to the ego’ and hard to take, but I want to help reframe these insights, and how a “good no” can help you refine a pitch and assess your business model against a criteria for how capital is allocated to start ups.

? 50 said no after the first meeting

?? 19 VC’s did not respond after the meeting

?? 96 requested more information after the meeting and I will share this journey and the outcomes for more information in a future post.?

Of those 96, I’ll update the Sankey chart shortly with how many said yes and no subsequent to getting that information.

For this update I want to share how some of the no’s helped me to review the business and the narrative and hone my pitch further. Just to be clear - before running this process, I had only a limited understanding of how capital is allocated to pre-seed and seed stage companies. So for me, the initial no’s were like tests - that later no’s hit harder emotionally, but more on that another time.

Treating a Good No as a positive outcome

Every time we received a No, I spit them into i) a Boilerplate No, and ii) a Good No.?

A Boilerplate No is obvious - it is just not a good fit and it sounds like this:

“Not excited and couldn’t get behind it - "I have taken it to the IC / don't think I could take it to IC as we just can’t get excited about what you are doing” - this is a very standard response.

A Good No has context, rationale and detail of why they have said no. I broke this latter group into key areas so I could look at the feedback where?there was commonality. A good no sounds like this:

1. Team - we love the team and your skills set among the founders but there is no experience in X and we want to see Y
2. Size of the market and the size of the problem - we cant see the size of the market for what you have presented us
3. Traction and Return On Investment - the ROI & traction is not enough come back when you hit X, Y or Z
4. Charging model and the Annual Contract Value - for what you are building the ACV are not high enough for us
5. Future Vision - the vision is not as broad as we would like to see for the desired market share
6. Slow to scale - you are selling the every large enterprise companies and they are slow to make decisions and this will impact your growth
7. GTM strategy and approach - the go to market strategy needs more work and we would need more clarity on this before we could invest
8. Too many buyers involved - there are too many people that need to be involved in getting the deal over the line - this is a risk.?
9. Location of the business - we only invest in Canada or the US (this is my fault and I should have done more research on this ahead of approaching them and setting up a meeting)
10. Too early - come back for series A when you hit X revenue. (this was my fault and I should have been more specific, I got excited when a tier 1 fund would take a meeting but inevitable it wasn’t a fit)?

The first 50 that said no shared different comments across these areas with various messages. But they were still very thematic and could be bundled into these 10 areas. Some of the feedback was very detailed and open ended to come back when these concerns had been addressed.

Each Good No - I was often encouraged or welcomed to have a call, which I did engage in a back and forth and they were willing to have a call to share their thoughts. There were often three or four paragraphs long with clear advice on what we could do to mitigate this for the business to succeed.?

At the end of week, I would collate each Good No and put the feedback into the themes above. I would call a founders meeting and we would look at the reasons for no and try to identify if we hadn’t clearly articulated the answer or if we were barking up the wrong tree. It was a humbling experience and one that helped shape future conversations.?

My one key takeaway from this is: Funders (VC’s) - try to share honest feedback with founders and founders take it with good grace and see it as an opportunity to grow and get better.

If you want to know more or set up a coaching call send me a message.