Quora Answer: How Do Startups Deal with a Rejection from Venture Capital?

The following is my answer to a Quora question: “How does someone deal with a rejection in venture capital for a startup?” 

That really depends on a few factors.  You have to understand that venture capital rejects a lot of startups for a variety of reasons.  We need to consider the reasons, and how they should be addressed. 

Sometimes, the problem is the match.  The venture capitalist have specific parameters and a mandate.  If your startup does not fit it, they will reject it.  If the issue is the mandate, then you need to qualify who you approach better so that you do not waste your time or their time.  If the issue is the funding stage, come back at the appropriate stage, if that is possible.  If you are at seed funding, there is no point approaching someone who funds series A.  If you are looking for a specific amount, there is no point approaching a venture capitalist who funds smaller amounts.  You are out of their risk tolerance. 

Sometimes, the problem is the pitch.  In such a case, redo the pitch, and consider what is in it for them.  You need to strengthen your argument for, and practice your objection handling.  This is where having good advisors is important.  They are supposed to look at your business plan and deck, and help you tighten it. 

Sometimes, it is because your team is not good enough.  This happens.  In such a case, beef up the team, and find someone with the requisite skills to be part of the team.  For example, it would be considered a risk if you run a technology startup, and none of your people are at least versed in that technology. 

Sometimes, the idea itself is not viewed as scalable and replicable to justify the funding.  If that is the case, go back to the drawing board and examine your idea.  If you can adjust it, then you have something.  If not, find something else.  Otherwise, leave it, and come back to it at a later date. 

Looking for funding is like going on a blind date with incomplete profiles.  There may be a thousand rejections before you succeed.  There is no shame in that.  If you believe enough in something, and surround yourself with the right support, that perseverance will pay off.