I was recently chatting with one of our portfolio founders about the importance of having empathy for entrepreneurs when we pass on investing. I have sat on the other side of the table, waiting anxiously for a response from an accelerator or investor who could mean the difference for the growth of the company. Even when the rejection is kind, it hurts. And when there is no response, the lack of interest is even more painful. A startup is the entrepreneur’s baby, after all. 

However, these rejections can also be a source of valuable feedback to help improve the business and the pitch. An entrepreneur will inevitably hear dozens, even hundreds, of “no’s” from investors before raising a round. An investor might pass on investing for any number of reasons, several of which are only temporary. Traction, revenue, and even the business model can change drastically between rounds, especially in an early-stage startup. I encourage startups to view a ‘no’ as a ‘not right now,’ and keep those stakeholders in your network as you grow. 

For that reason, it is crucial to respond to that rejection email politely and ask the investor if you can keep them updated as you progress. Magma Partners’ Managing Partner, Nathan Lustig, likes to say “always be sure to close the loop.” Make sure you leave the best possible impression of you and your company.

That being said, do not pester your future investor.

No one likes to feel manipulated, prodded, or ignored. If an investor makes it clear that they do not want to be contacted or do not want to meet in the future, thank them for their time and move on. 

If they are open to it, ask for feedback about your application or pitch if they did not give it to you when they passed. If there are aspects you can work on, ask kindly if you can get back in touch in 6-12 months to discuss progress. Most investors will respond well and will be happy to be in touch with entrepreneurs that prove their dedication to their startup. 

Building relationships takes time. 

In a podcast with Nathan Lustig, Lab4U founder Komal Dadlani admitted that it took two years of working with her US investor before he was ready to invest. Investing thousands or millions of dollars in a risky, illiquid asset can sometimes require significant thought, or even just proof that the entrepreneur has what it takes. 

That being said, there is no excuse for an investor taking months to respond (or never responding). If the answer is no, you should expect a firm and prompt ‘no’ so you can move on and look elsewhere or focus on building the business. We have invested in companies that we passed on during the first meeting; in these cases, the entrepreneurs stayed in touch, asked for concise advice, and invited us to take another look when they were hitting their targets. 

Think about the long term. 

Every email or interaction with an investor (even one that said no) is an opportunity to leave a good impression. However, most startups do not live more than 12-24 months, meaning the idea or company might change before you talk to an investor again. Even if they did not see a fit for your previous idea, a pivot or new startup might be of interest – if they like you. 

After all, most investors will tell you that it is better to invest in a great team with a bad idea than vice versa. If an entrepreneur leaves an incredible impression, demonstrating both fire and a humble desire to learn, any investor would be excited to be on their team. The idea can change hundreds of times before you hit the jackpot, so a stable investor-entrepreneur relationship is crucial to success. 

Rejection is part of building a company. It hurts. However, resist the urge to bury the email or worse, lash out to tell the investor why they were wrong not to pick you. Even a short response to ask to update them every 6-12 months will leave a much better impression than silence. Be the kind of person you (or your investor) would want to work with. Don’t forget to close the loop. 

1 comment
  1. I agree. Respect & empathy should be the defaults and not the other way around. However most of the time, Investors (or accelerators for that matter) won’t take the time to provide individual and useful feedback on their rejection.

    IMO best you can do: Say thanks, don’t hold hard feelings and just move on, there’s still ton of leads out there.

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