It sucks to hear “no” and as an early stage investor, the law of numbers means I have to say it regularly. Sometimes I deliver it quickly, sometimes it’s after deliberation. But I try to always do it honestly with feedback because we can also be on the receiving end of a “no” and want the same courtesy. My “no’s” often include an offer to stay in touch or reach out if I can ever be of help. It’s not a throw-away line meant to make me seem ‘founder friendly’ but really a desire to maintain a relationship.
My assumption is that this offer is may initially be treated with (a) dismissal or (b) skepticism by a few founders and it makes sense why. Partly the need to be ‘on to the next one’ – don’t spend your time chasing after the no’s when you just need to hear yes once or twice from someone else. Or don’t throw good time after bad since many investors will put on a smile but appropriately prioritize any needs you have below the companies in their portfolio. And some of it is just human nature – “No? Eff you, I’m going to show all of you that we’re right.” But just as I’ll stay in touch with founders who may have turned us down, trying to find an opportunity to turn a loss into a delayed win, I’ve seen some entrepreneurs do a great job of converting an initial NO into a relationship. Here are some examples:
Adding Me To Your “Friends of…” Update Emails
Many founders send our periodic “friends of…” emails with updates on the product, business, team. Perfectly acceptable – and IMO not spammy – to add any investor to this list proactively with whom you had a good rapport. If you want to be super-safe, add them and forward last update with a note that just says “hey, enjoyed getting to know you. Would love to stay in touch and so adding you to our email list. If you’d prefer to not receive these, just let me know.” Note – this is different than being signed up for your general public facing mailing list. [Update: here's a nice example of an investor update email]
Connect With Me on LinkedIn or Your Social Network of Choice
If we got pretty far down the mutual evaluation process, I’m happy to have you traverse my graph and occasionally ask me if an intro to XYZ would be ok. The best way to do this is (a) provide context for why you want to meet someone and (b) understand if I decline to make the intro based on any number of factors.
Refer Other Smart Founders/Intros My Way
If we’ve had a good interaction – despite it not resulting in an investment – the best thing you can do is consider me on your short list to introduce other entrepreneurs who are looking for funding. In fact, the first few times this happened – from founders we passed on, or where there was mutual recognition of lack of fit – was f’in amazing. It was one of the best feelings I’ve had in the first 18 months of Homebrew. You go to bat for me and I’ll go to bat for you. Not because I want to create some transactional quid pro quo relationship but because it’s the strongest signal of your character and judgment. Makes me want to reciprocate by keeping you top of mind for additional fundraising, folks who might want to work for you, etc.
Give Me Feedback on the Process
This happened only once but man, it was appreciated and classy -> after a few discussions with a founding team, we decided to pass with some detailed notes for them. The CEO processed the info (including some follow up clarifying questions) and then also gave us some feedback (positive and negative) on our process. What a gift for us. Totally unexpected but thoughtful. Framed helpfully, not spitefully. My immediate thought was, wow, this guy is going to be a great leader.
Founders, investors – any other ways you’ve build relationships after the No?