Using "No" to Power Your Fundraise

Getting told "no" when selling something you believe in that your livelihood depends on is difficult. Getting told no in that context 100 times in a row is very difficult. It’s why most people shudder at the thought of going into sales, and why fundraising is so daunting for founders. Putting yourself out there only to be "rejected" over and over isn't a fun proposition.

Growing up, my dad loved telling us that no one had been rejected more than him. He would proudly tell me and my brothers about the dozens of job rejection letters he received in the months leading up to graduation. For some reason, at the time unbeknownst to us, he embraced the no’s. He went so far as to hang the letters from a bulletin board in his "dorm" aka trailer (we were endlessly entertained by the fact that Stanford's student housing used to include a trailer park). I found it amazing that he could so wholeheartedly embrace rejection. I passed it off as another quirk of his upbeat, self-deprecating personality. It was only in early adulthood that I began to fully appreciate the power of embracing no.

I’ve since spent 7 years selling software and building venture-backed businesses. Being told no when you're selling software is one thing, but when you're a founder selling your "baby" and your capabilities as an operator, it can feel very personal. Negativity can build and the no's can feed imposter syndrome.

A recent guest on the VC Architects, Maxine Minter (Founder & GP of Co Ventures), described imposter syndrome as, "present for anyone who is building something in the world. Any act of stretching; it's a very natural and valuable thing that our body does.”

It may be natural, and healthy if dealt with properly, but it can also consume founders when facing repeated rejection. This can seriously inhibit your ability to fundraise, as investors easily sniff out a lack of confidence or jadedness.

Instead of allowing the no to confirm your worst fears that you’re not “cut out for this”, do what Maxine suggests and look at the evidence. But maybe not right away. I suggest the following process when dealing with a difficult no, whether in sales, fundraising, or elsewhere in life.

Fact Find: collect feedback when you get the no. Why is it a no right now, what are the challenges, and what deliverables or KPIs would change it to a yes?

Do this on a call if possible. You presumably spent significant time with this person. They owe you an explanation over the phone (and for the most part they know that). I’ve been far more successful getting actionable feedback over the phone than over email, and have very rarely pissed people off in the process (if they get pissed off, they’re the wrong partner anyway).

Recover: although it’s vital to collect feedback as soon as you get the no, this is an emotionally charged moment, so it’s usually not worth analyzing that feedback further until you're emotionally removed from it, which can take a few hours or a few days.

I've often found that the best medicine, other than time, is humor. So you spent the last 3 months chasing down a deal, hopping on calls with everyone on the team, sending value-add touchpoints weekly, perfecting the proposal, and thinking about the deal from every angle. Maybe you even got a verbal commitment before they went cold and eventually told you no. What will dwelling on it achieve? Once you have the actionable feedback,  sometimes all you can do is find the humor in it.

When you’re able to laugh at a particularly bad no or find humor in the sheer volume of rejection in, say, a fundraising process, you take power away from those no’s, which enables you to continue the game that inevitably ends in the only yes that matters.

Analyze and plan: Once you've had a chance to recover, it's time to analyze the feedback and come up with a plan of action. If they need to see specific KPIs or benchmarks, what does that timeline look like? What can you do to demonstrate consistent progress toward those goals?

Note: don’t just take their word for it - read between the lines and look at the evidence. Some people will be truthful about why it's a no, especially if they’re a champion genuinely trying to sell internally. But it’s common for investors or prospects to give a generic, "cop out" reasons for passing. During step 1, ask follow up questions to dig into the driving reason for passing.

Looking back on my career in sales, I find it difficult to recall all the no’s I got over the years, even though they outweighed the yeses 25:1. The successful sales I remember most clearly, however, are the ones that were built over years of being told no before finally getting to yes. That's why I encourage every sales contributor and founder to view "no" as an opportunity. Without getting a no first, I never would have sold those accounts. Had I pushed too hard to overcome the no in that moment, instead of seeking to understand the objections, and carefully planning how to overcome them over time and demonstrate momentum, I also wouldn’t have gotten those sales.

Michael True of Prescient AI recently spoke to this strategy coming off of his $4.5 million seed fundraise (check out all episodes of the Fundraising Debrief podcast here):

If you’re talking to the right people (aka properly qualifying your prospect), a no is almost never a no in perpetuity. Instead, it’s a key part of the discovery process, and an opportunity to ask questions to plan the path to yes. It’s not enough to show up out of the blue a year later with a solution to their 5 objections. You need to communicate that you will keep them updated and put them on a regular cadence that demonstrates constant and consistent progress toward the KPIs and goals that address their concerns. That's how you can use no’s to power your fundraise.