Got a ‘no’ from an investor? It’s not the end of the world.

The truth is, most people don’t like hearing the word “no.”

As beings of emotion, we typically associate it with refusal and rejection, which can make us feel anxious, distressed, depressed, and demotivated. 

As a founder, you’ve likely experienced this in one way or another. When you’ve worked tirelessly to build your company, fine-tune your growth plans, and design your pitch to the best standards, receiving an investor’s “no” (after a long series of presentations and exchanges) could be like a kick in the guts, leaving your spirits drained.

Don’t despair. Investors will reject you; it’s a vital part of the process and imperative to optimising your efforts. So you must realise that while rejection can not be eliminated, it can still hold great utility. This idea is what we’ll be exploring in this article and the accompanying video. 

First things first, refresh your perspective

An article published in Psychology Today, written by authors Andrew Newberg M.D. and Mark Waldman, presented this thought:

“If I were to put you into an MRI scanner—a huge donut-shaped magnet that can take a video of the neural changes in your brain—and flash the word “NO” for less than one second, you’d see a sudden release of dozens of stress-producing hormones and neurotransmitters.”

From our perspective, the scenario presented by these experts shows that we are indeed likely to have a negative response whenever we encounter the word, especially when we are amid events and circumstances that matter.

We do not discount these insights. 

However, consider this for a moment: can that “no” actually benefit you? 

Through the lens of a founder, how relevant do you think this mindset is when you are raising capital?

What if we told you, with certainty, that using that “no” to your advantage can give you access to exponential opportunities?

In this video, Wholesale Investor Co-Founder and Managing Director Steve Torso—someone who personally went through many investor rejections—sheds light on these ideas and shares three effortless actions that can enable you to spin that controversial word into gold.

Read on or watch the clip to get these valuable insights. Let’s begin!

1. Embrace lifelong learning. Treat the investors who have said “no” to you as mentors, and take every opportunity to get their feedback.

While it is initially tempting to distance yourself from investors who have not accepted your proposal or idea, Steve urges you to approach the situation differently and see them as mentors instead. 

In his experience, those who aren’t initially investing in your venture can give you some of the best lessons, mainly through unfiltered direct feedback. Proactively use the opportunity to probe their response further and ask the right “why” and “how” questions. 

By successfully securing their thoughts, considerations, and suggestions, you’ll be able to figure out how to address the gaps in your growing business.

Ultimately, responding well to that “no” is your ticket to finding out precisely what you need to improve in your offering or proposal. As an added benefit, you also send incredible signals to investors by seeking guidance from them, indicating how serious you are in pursuing your ambitions.

These are acts that inevitably open up more doors and possibilities.

2. Have your information ready, as spot-on as possible, and get to the fastest yes/no you can get.

When you’re in the thick of raising capital, you’d want to use your time and resources wisely to make sure you’re not losing momentum. According to Steve, you should aim for the fastest “yes” or “no” after your initial communication. 

The key to achieving this is to have all your information on hand, helping investors (who, in many cases, have super tight schedules) to make their decision in the shortest amount of time possible. Your information must be up-to-date, verifiable, and complete.

And make an effort to present these in an organised manner—always.

In the decade-long experience of Wholesale Investor, we’ve encountered many companies that have gone through months of capital raising, only to receive a “no” at the end. Sadly, not all of these companies responded well, and some founders felt defeated and deflated. 

Receiving the rejection damaged their confidence, which led to crippling effects across their business.

We encourage you to avoid falling into the same situation and ensure that you are prepared to respond well should you ever receive a “no.”

3. Treat (and respond to) negative feedback and questions as process or software glitches.

Whenever you get a “no” from investors or receive unexpected negative feedback, Steve says you have the opportunity to solve it via a process or software approach. 

These smart, modern, and sustainable tactics empower you to tackle the problems efficiently, giving you more time to focus on the more significant tasks at hand. 

So gather your best team members and decide to act. 

These needed improvements and fixes will prevent you from receiving the same question, again and again, saving you hundreds of hours of explaining the same thing to potential investors. 

In addition, you also strengthen the capabilities of your overall operations for the long term.

To remain on top of your game, master the art of inventing solutions.

Rise above the rejection

Yes, getting that “no” can be highly challenging—especially in the context of capital raising.

Because rejection, in any form, can either make you or break you. It constantly tests your resilience and pushes you to your limit, even when you’re sure that you’re already doing your best across the board.

Understand that hearing “no” is most certainly not the end game

Cognisant of the undesirable effects and how people usually respond, as founders, you can actively decide to use the situation to your advantage.

Use these valuable insights and action points from Steve to fine-tune your preparations, and bolster your response should you find yourself in these instances. See your investors as mentors and allies, seek feedback, and focus on creating solutions.

These actions, combined with best practices, will surely set you up for success.

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