Getting Rejected By Venture Capitalists Can Be Depressing But May Open New Opportunities For You
I've learned the hard way that most entrepreneurs will never make it to raise money for their startup, and in most cases, they'll get rejected by venture capitalists.
You see, when my clients, mainly founders of tech and SaaS startups, struggled to raise venture capital; when I saw what this process did to them in terms of emotional setbacks and business regression, It made me want to help them in any way I can.
When I discovered that only 0.5% could raise money for their startup, I wanted to give my clients the guidance they need to overcome this enormous challenge.
Believe it or not, those who raise are the exception, and I found out that many successful entrepreneurs did it without having to raise venture capital.
And what is better than learning how others, just like you, did it and to model their success?
That is why I've decided to buy the distribution rights of the book Bootstrapped.
The book tells the story of carefully selected 75 entrepreneurs, who, against all the odds, brought their ideas to fruition without begging for outside money.
They did it the hard way, but they enjoyed working for themselves and keeping the whole company under their control.
I encourage you to learn those stories and to get the aspiration and motivation you need, to bring your dream into reality.
Here is a section from the book that will give you some inspiration.
Who Are Bootstrappers?
For the most part, they are just like you and me. The MAJOR difference between successful Bootstrappers and you is this. They take action with their ideas. They don’t over think, over analyze, or wait for the “perfect” time to bring their ideas to market.
There is a Japanese proverb that says “A vision without action is just a daydream”.
This is where most people fail. They never get started. They become paralyzed with fear of the unknown. They don’t know how to get out of first gear, and when they get rejected by venture capitalists, they simply abundant their idea.
Bootstrappers know how to get from 1st gear to 5th gear using the most efficient means possible and the following stories will show you how they did it.
Where do their ideas come from?
A lot of times they come by accident or they come from their own personal experiences to “scratch their own itch” or to solve a problem they personally experienced.
They don’t always set out to create multi-million dollar businesses. In fact, many started their businesses as a “side” project that over the years grew into a multi-million dollar business, but they were not planned that way.
What are their backgrounds?
They come from a variety of backgrounds. Most entrepreneurs profiled in Bootstrapped have previously worked in the corporate world before setting their own sail.
These entrepreneurs are located all across the country from California to Michigan to Connecticut. Some have MBAs, others have little formal education.
The diversity of successful entrepreneurs is the most uplifting to me because they are just like you and me.
Bootstrappers don’t have any magical super powers or advantages that you don’t have yourself.
How do they pay the bills when starting if they can't raise money for their startup?
There are 4 primary ways Bootstrappers continue to pay the bills while building their startups:
1.) Maintain their full-time job and work on their startup part-time until they can earn enough on the side to comfortably leave their day jobs.
2.) They do consulting work on the side to bring in cash.
3.) Some of them have saved enough cash and use their savings to pay their bills.
4.) They build a business that brings in cash very rapidly.
How much money do they start with?
Bootstrappers that got rejected by venture capitalists started with as much as $500,000 scraped together from personal savings and family/friends and as little as $10 to purchase a domain name.
“On average” Bootstrappers invest a few thousand dollars into their startups, but the amount of money is entirely dependent on the company, business model and the founder’s skill sets.
Do they work alone or have partners?
Both, but the majority have co-founders and for good reason. Co-founders often complement the skills of one another and allow them to work collectively to bootstrap a business.
Many business entrepreneurs found technical programmers as co-founders and vice versa.
“Big vision” entrepreneurs found tactical “detail-oriented” co-founders to help them execute on their ideas. However, there are several entrepreneurs who acted alone as sole founders of their companies and did equally well.
The need for a co-founder is dependent on your personality, strengths, and cash availability.
How Have They Succeeded?
None of the Bootstrappers in this book will tell you that their journey was easy. But that’s what makes entrepreneurship so special. It’s a feat accomplished by so few, not from the high number of failures, but from the high number that never try.
Bootstrappers succeeded through years of sweat equity to build their businesses to where they are now.
Many have even enjoyed successfully selling their businesses for tens of millions of dollars.
Others are still building the startups they founded, but are reaping the rewards of knowing that they have crossed the chasm where most startups fail and on their way to a stable and thriving business.
Final takeaways for those who got rejected by venture Capitalists
At this point, you have two options:
1. you can choose the easy way which keeps chasing venture capital investors, and its kinda like going up to a 4-digit lock and trying to guess the code, but you know there are more than 10,000 possible combinations to a four digit lock?
Well you can try crack it yourself and who knows maybe you will find a combination that works in a year or two or three but most probably never.
2. Or, you can do it the hard and fulfilling way by getting the code to unlock your startup potential by those who already did it and model their success.
You don't need to invent the wheel, just follow others who did it in your area of operation. Learn how they built their startup, try to contact them and ask for guidance.
The startup's graveyard is full of pioneers who attempted to outsmart the system and do it all by themselves; Don't be a pioneer, instead be a good student of successful entrepreneurs.