You are not alone to find yourself in a position where the Venture Capitalists (VC s) have rejected your application for funding. Raising money is extremely hard and takes a much longer time than anticipated. In fact, you will be forced to meet a larger number of investors that you have thought.
Do understand that venture capitalists have the tendency to reply in the negative. This is because they have a limited budget and with it comes a finite number of investments. They thus search for reasons as to why they will not fund you. This has intensified in the coming years.
Do take heart. Challenges like this can be overcome and getting rejected is actually a valuable experience for many startups. You can use the negative feedback to move forward.
Re-examine your business model
Investors love companies which have excellent growth potential. To put it simply, you must have high standards. You must have an excellent understanding of the target market, including its potential size and probable growth. Comprehend the needs of your customers and their pain points. You must have a superb grasp of the potential competitive landscape as well as the present one.
Ask what went wrong
Angel investors and venture capitalists are extremely polite. They want to be seen as nice and supportive but firm individuals. Ask them the reason as to why you have been rejected for funding. Most of the time, you will see that they have a valid reason for rejecting you- a factor you have never thought by yourself.
Review financing market materials
You should prepare and be adept in documents like an attractive elevator pitch, a concise executive summary, business plans exhibiting robust business model and a financial projections set with potential to generate anywhere between 10x to 30x ROI.
Slightly change the product positioning
Investors can be afraid that you are trying to sell to a niche market. They may also believe that you have no target market at all. In short, they love companies which will satisfy a big and rapidly growing market. Simply put, everything concerns your forecasts and the plans to capitalize on them. You should validate the financial projections you have put forward from a kind of “top-down” perspective in terms of growth potential and market size. Your marketing and product plans must also follow suit.