Behind the scenes #8 | Don't let a negative response put you off





How are you doing? In today’s “Behind the scenes” we would like to say a little about the red cards referees handed out to you during the recent matches. We cannot tell you what all VCs are driven by, but we are keen to share with you our experiences and conclusions. Follow us then to the dressing room for a little post-match analysis session, where we will check what did not go according to plan.
TDJ Pitango Ventures team

Photo: National Digital Archive, Poland.

Don’t let a negative response put you off

It is no secret to say that our sector is rather selective – research conducted by ECGI*, involving 681 VC firms, shows that funds look through an average of 400 companies a year, of which they pick a mere five to invest in.
We know this might sound terrifying, affecting our motivation negatively – this is why we would like you to remember that even if one fund rejects your proposal others will not necessarily follow suit. Funds have different investing mandates, a range of philosophies and interests in a range of sectors (these being only some of the factors affecting funders’ decision making processes). Do not be dissuaded and disheartened – go after investors who are right for you and who will truly believe in your project.
Not all VC firms are in the habit of giving clear feedback and discussing the reasons for the decisions they arrive at. We have therefore collected a list of most common reasons which lead us to saying “NO”:
1. The Startup is not part of our investment mandate.
2. The problem the startup aims to solve has already been resolved. The unique selling point is not strong enough.
3. The project is locally focused and has no potential to be scaled globally.
4. The project has solid potential, but it is not within our fields of competence.
5. An aggressive investor has already dominated the cap table at a relatively early stage and there is little room for newcomers.
As you can see, you can overcome most of the barriers listed below by doing thorough research and contacting funds which meet your profile and suit your proposals. The problem is not always in the project and its potential.
* ECGI Report: “How do Venture Capitalists make decisions?”, 2016 

A decline is an opportunity for feedback and learning. You don’t need to agree with what VC’s say, but if you keep on hearing the same reasons, maybe it makes sense to go back to the drawing board and reconsider. Wojciech Fedorowicz
How do you deal with a negative answer from a VC? You may receive an answer that you are too early or too far from the investment charter, or some other reasons. While some of these answers may be just a polite statement, other could represent a truthful situation. You do want to keep the door open for re-consideration, in case the situation changes in the future and there is a new opportunity for investment. The VCs will appreciate it.Daniel Star

More issues you can find here