If you’re like many entrepreneurs who have a great business idea, you may have approached a venture capital firm with a proposal for additional capital financing. And like many entrepreneurs before you, you may have been rejected before you even met face-to-face with the people at the VC firm. Getting a rejection from a VC firm is not necessarily the end of road, nor should it stop you from continuing to pursue venture capital.
Your rejection can lead to keen insights in what you and your business need to do to improve chances of receiving a “yes” vote from another VC firm. But in order to get access to those insights, you need to approach the rejecting VC firm and ask for feedback.
Why Ask For Feedback?
A VC firm typically has deep experience in knowing what business models work and what doesn’t. After all, they are in the business of helping companies succeed. Their experience can provide valuable information to you in how to present your idea in a better light, or at least on how to improve your business model so that it will look attractive to VC firms in the future.
A venture capital firm’s reason for passing on your proposal may help you discover how your perspective differs from other professionals. You may find out that your “great” business idea is not so great after all, or it has already be tried, tested and saturated by other entrepreneurs before you. You may want to re-evaluate your business idea and find other ways to make it innovative and fill a niche.
You also could find out that your business strategy does not align or match up with that particular VC firm’s investment portfolio. In that case, you may want to review your list of potential venture capital firms and re-evaluate which ones to approach next.
Ultimately, you may learn that your business idea and business growth strategy does not fit with the high expectations of a VC firm. You may want to re-evaluate other capitalization options other than VC firms in that case.
How to Ask
You need to approach the firm and tell them you are interested in their feedback. VC firms are not in the habit of providing feedback and constructive criticism to rejected entrepreneurs. For one thing, they are far too busy. Another reason is that they know that entrepreneurs may not take rejection and criticism well, and subsequently, they do not make a practice of providing it.
However, it is likely that you can get some positive and constructive information if you only ask. Be sure to be polite and always remain businesslike. Your attitude will be a key in whether a VC provides feedback or not. You can ask by email, a business letter, or a phone call if you feel it is appropriate.
What Not to Do
What you should avoid is being rude to a VC firm that has rejected you. Remember, it’s nothing personal. It’s just business. Leave your pride behind you. And don’t continually bother or pester a VC firm if they do not respond or have refused to give you feedback.
Your business idea is your brainchild, and you should be ready to nurture it into the business that you dreamed. Asking for feedback in order to make better decisions and improvements is never a bad business idea.