The Art of Saying No
No matter how efficiently we work or how long hours we punch in, time is always precious and it really does fly. Startup entrepreneurs are chronically lacking of hours in a day. I once estimated, that I probably have time to do about 25% of the things I was expected to do, so I was forced to prioritize heavily. But that is not the point of this post. The point is; Why is it so hard for investors to say no? When startups hunt for funding it is a full-time task. Let's take a hypothetical startup looking for seed funding. They approach 100 investors with a quick pitch. Out of those 100 investors, 20 give them the chance to really tell their story. Out of those 20 investors 10 request more material and a second session to go through the details. And again 5 investors are interested and want to negotiate. Out of those 5 investors 2 end up investing. So how much time has been consumed? With everything from producing materials and emails to commuting to visit the investors and debriefing with your partners, we're easily talking about 200-400 hours. One big issue in this equation is that especially angel investors seem to have a hard time saying no, and giving a clear reason. Saying no early on would save everyone's time.
A startup we work with gave a wonderful example of receiving a "no" from a very experienced business angel. After their session, the investor stated that he receives around 700 decks a year. This startup was in the top 30 of this year, but it just requires that extra something to be in the top 10. (This investor makes around 10 investments per year). So nothing was really wrong or concerning the investor, but he just needed something a bit more to make the leap. You don't need a sophisticated reason for the "no" but the worst thing is dragging on too long. In another example one investor kept on saying;"I'm in!" for three months, but when it came time to close the investment round, he was out!
It's not only the entrepreneurs time that's consumed, it's also the investors' time. So investors, if you're going to say no, say no, and carry on.