This is the last of four posts offering practical advice to early-stage startup founders from an entrepreneur turned venture capitalist. Jonathan Shriftman is a partner at Expanding Capital, a growth stage VC fund that invested in companies like Coinbase, Cameo, Classpass, Postscript and Astra Rockets. Previously Jonathan founded Humin, an AI-powered address book that was acquired by Tinder, and Solé Bicycles, the first direct-to-consumer online bicycle retailer.
You can read the earlier parts of this series here:
- Advice for early-stage founders
- Four questions startup founders should ask investors
- Three signs that it’s time to raise funds
Raising capital can be brutal. We asked Jonathan for his best advice on dealing with rejection.
When you’re fundraising it can be really difficult when VCs say, “No.” Here is a practical list of things to do when you receive a rejection from a VC.
Thank them for their time
Don’t let the bridges you cross become bridges that you burn.
Ask the VC for feedback
They may have very specific concerns about whether you have the right growth, the right numbers, or the right team. Or perhaps they believe you’re solving the wrong problem. You might disagree with the feedback, but if there are parts that you agree with, you can try to address those issues ahead of your next fundraising approach.
In my experience as a founder, I took that feedback seriously from a VC who had rejected the company. Later I went back to them to show how I had implemented their suggested changes and they became investors.
Even if a VC rejects you at first, the door might not be closed forever.
Ask for introductions
Even if a VC has told you, “No,” ask them if they’d be willing to make introductions to other funds that they think might be a more strategic fit.
You might have spoken to a VC that has deep domain expertise in fintech or healthcare and you can ask them if they know other funds that are more aligned to your business. Oftentimes a VC will be willing to make some helpful intros to other funds who would move forwards and make an investment in your company.
For more tips from venture capitalists and access to the resources you need to see your startup through its next challenge, sign up today to Microsoft for Startups Founders Hub.
