I have to say “no” alot — par for the course as a travel venture capitalist & investor. Typically 95% of the time or more depending on which firm you’re dealing with.
Conversely this means 95% of the entrepreneurs & businessmen/women I hear pitches on will hear “no” despite countless hours of sacrifice to get their venture to this point.
Sometimes a “no” means “no” and an investor doesn’t feel your company, team, business model, market, roadmap or combination thereof is worth investing in.
Here are some other reasons you may get a “no” from a VC:
• Your company may not be growing at a scale a VC firm needs it to. I just don’t think writing you a $1M check will get me a 10X or 20X return. I see companies all the time that will make sustainable & profitable businesses that I have no doubt will inevitably spin off cash to their owners and investors; just not fast enough to warrant a VC investment.
Remember that 1 out of 10 VC investments is a ‘hit’ — if you’re good — so that means the firm has 4 or 5 investments that go belly up and maybe 2 or 3 companies that return just what the firm put in. These are investments without personal guarantees or collateral so the 10X or 20X return looks greedy but should be taken in context for the risk.
• The market you’re addressing isn’t large enough or growing fast enough for institutional funding (but may sustain a viable business using other sources of funding/lending).
• Your company does not meet the financial metrics a VC firm follows.
• You are competing with other deals the VC firm is currently investing in. Your deal may be overshadowed by another deal but could have been funded at another date.
• You are competing with the return the deals the VC firm has done in the past. Like a batter opting out of going to bat because they don’t want to ruin their batting average.
• You may not get an outright “no”. I hated this when I was fundraising. VC’s who wasted your time or kept you strung along and typical horror stories. Now that I’m on the other side I only use the ‘until you get more traction’ response if I feel a prospective investment isn’t quite there yet but interesting enough to see if you get further than you are now.
Hope this sheds some light on the investment process.