Shubham Saroj
Raising funds from a fresh round of funding might be a tiring process in itself as it can take a lot of time and rejections before you get your hands on funding. Hence, I believe you must know all the reasons why you could get rejected by the investors before you pitch them your trillion dollar idea.
There might be several reasons but we have zeroed in on these 10 reasons which are the most common ones why you could get rejected by the investors. So let’s dive in to know each of one these in great detail.
1. Co-Founders – The first and foremost thing that an investor looks while investing in a business is the co-founder or co-founders. If you’re not capable and competent as a founder of the business, then there’s a very high probability that the investors will reject you.
Always remember that ideas are merely concepts which have no potential. All the money lies in the execution and implementation which is done by the entrepreneur. Hence, make sure to appear as a confident individual and make sure that you have what it takes to make a business successful.
You don’t have to be a graduate from an Ivy League college but have some credentials to back you up. It the investors don’t believe in you then they won’t believe in your idea as well.
2. Team – Since you can’t do everything as a co-founder, you do need a strong team which can help you in scaling your business. When the investors fund a business, they make sure that you have the right team with you or not.
You might posses the caliber of Jeff Bezos or Elon Musk but if you lack a strong team, you won’t go too far. Hence, having a strong team will increase your chances of securing funding.
3. Idea – If the investors are satisfied with the co-founders and the team, they now look into the business idea. Your idea doesn’t have to be out of this world but it must have a USP or a unique selling proposition which can serve as a competitive advantage or a differentiating factor against your competitors.
Your idea must be scalable. If scaling your idea requires too many resources, then you might be rejected. Investors are willing to fund those ideas that could be scaled quickly without much effort. Hence, tech based businesses secure funding easily as compared to a traditional idea.
4. Vision – The investors want to know about the about the vision of the co-founders when investing into their business.
If you don’t have a clear vision about where you want to take your business, then that might deter investors to fund you. Your vision should also be big and grand to woo investors.
5. Execution – When investors ask you how are you going to achieve your vision, you must have a good answer otherwise that might create a bad impression in the minds of investors.
Your idea might be the next trillion dollars idea but investors don’t give a shit about it unless and until you’re able to explain how you’re going to achieve your goal. You must have planned out your next 5 moves where you can confidently tell them about the future of your business.
6. Industry – This is a very simple yet another reason why your idea may get rejected by the investors. There are some investors that invest in only certain industries, for example – tech or financial industry.
Hence, you must do a background research before you approach an investor because he might not be interested in your industry altogether. It’s relatively easier to secure funding when you have done your research about the investors that you’ll be pitching to.
7. Preparation – The investors are smart people and they can cross question you about almost everything regarding your business. Hence, it’s important to be prepared in advance with all those questions that might be asked by the investors.
The more you’re prepared, the higher your chances of securing funding. You should also be presentable, polite and as professional as possible. You should be on time or even before time but never after. If you don’t respect their time and keep them waiting, then simply forget about funding.
8. Lies – While you’re pitching your idea, you should never lie about your numbers or something you don’t have.
You should never say that there’s no competition to your business because there’s always someone working on similar things like you. If they sense that you lied then just like last point, forget about funding.
9. You’re too desperate – If you’re too desperate for funds or you react too much like a pushy car salesman who just wants to sell the car anyway, then investors will never invest into your business. They like confident entrepreneurs who are worth every trait that matters in the long run.
Even if you’re on the verge of bankruptcy and you’re desperate to get funds, don’t appear desperate. Act like a brave risk taking entrepreneur who loves to play the high risk high reward game.
10. They might be wrong – The last reason why investors reject funding has nothing to do with you. Investors are humans as even they make mistakes.
There are several cases where investors rejected major ideas which went on to become highly successful billion dollar companies. So if you get rejected, then don’t blame yourself and keep on trying.
Funding Simplified
Even if the investors reject you, never react aggressively, be as polite as possible, say thank you for giving us a chance to showcase our idea and keep trying until you get your hands on funding by an investor who’s eager to invest in your business. The investors that might reject you today can also help you tomorrow in the future. Hence, stay patient but keep trying as hard as possible.
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