Approach Fundraising with the Right Mindset

Posted on Thursday, March 4, 2010 at 9:53AM by

Jeff |

One of the trends I've seen from folks who are trying to raise capital is that they tend to take rejection personally -- and who wouldn't I suppose. But, I think the important thing to remember is that while receiving an investment is a vote of confidence in you and your company, not receiving investment is not necessarily a vote that you stink and your company is doomed to failure.

There are hundreds of reasons why someone, be it an individual, a bank, or a venture capitalist, might pass on your investment. They might have different portfolio requirements, they might have competing investments, they might be on a different time horizon from what you present, they might not like the color of your tie, they might be out of money, they might not like where you are located -- who knows.

However, I think if you go into the process with the right mindset, it makes this all a little easier to understand. I view raising capital as being similar to an aspiring actor auditioning for a part. Sure, if you don't get the part, there is going to be a piece of you that takes it personally -- but there's also an understanding that you probably won't get the part, and that if you don't, it *might* be because they think you are a lousy actor, but it might also be that you were too tall, your eyes were the wrong color, your voice was wrong for the part, or that they just ate a bad tuna sandwich for lunch and were more focused on that than on your audition.

So what is an aspiring actor to do? Lots and lots of auditions, of course. The same holds true for raising capital -- they key is to schedule lots of "auditions", dust yourself off from rejections, and get back into the mix until you "get the part".

And guess what? Over time and lots of these auditions, you'll get better at it, you'll start to understand what the investors expect and are looking for, you'll become more confident, and your whole pitch will move to the next level.

I can tell you some statistics from personal experience: I've successfully raised capital for my companies 7 times or so -- but I've literally been rejected more than 100 times, probably more than 200 times. This is how the game works, and if you aren't getting rejected, you aren't trying hard enough to raise your funding.

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Reader Comments (13)

This post seems to tie in nicely with yours:

http://coconutheadsets.com/2010/03/02/what-i-learned-raising-a-million-dollars-for-a-startup-with-no-business-plan-and-no-financial-projections-while-drinking-a-beer/

March 4, 2010 |

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Hey Jeff - I used to work for Cantaloupe.tv and I filmed you once at a Venture Club meeting which went into a video we did for IndianaEntrepreneur.tv

This is the first I'm reading your blog (found it on Twitter) but it's great to see people like you in Indianapolis sharing your startup knowledge.

By the way, I help organize a monthly meetup called Hackers and Founders to bring tech startups together in Indianapolis. I thought you might know some people who are interested in such an event. (or you readers might be interested)

http://www.meetup.com/Hackers-and-Founders-Indianapolis/

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