The reasons behind the investors say “No” answer?

The reasons behind the investors say “No” answer?

Sophie Nguyen

“It just some time you meet the wrong investors at the wrong time”

Let imagine a scenario when you come to see your ‘potential investors’ with a brilliant idea and you have already got some traction in the marketplace, investors still say no this investment opportunity. Have you ever wonder about the reasons behind ‘No’ answer? According to Brett Fox, these can be possibilities

Your company is not in a segment that investors are interested in

If you even cannot get a meeting with investors, this can be a fundamental reason. Not all investors are interested in the same things. Some investors only invest in a field that they are knowledgeable.

Your company is not going to make any difference in the investors’ fund

Investors are looking for returns when they make an investment. The size of the return has a positive correlation with the size of the investor fund. Bigger the fund, bigger the value of return/value of the company. For example, you have a company worth $100M and searching for help in a $1B fund. It is 0% that your $100M is not going to create any big change in $1B fund. Meanwhile, your $100M can make a huge dent in the success of $200M fund. This is the fund that you should look for.

Your company is not in a stage that investors are interested in

There are several types of investors: angels, early-stage VC, late-stage VC, and so on. If you are a newborn company or maybe you just have an idea in your mind, you should look for angles investors, not any VC.

Your company is not located in an area that convenient for investors

Location is important, especially for a young company. Investors want to be close to their investment so they can be reached out on time. It is hard for a long-distance relationship to last long. 

Your company is not growing quickly enough

The passive growth rate is not a good sight for startup cause it is going to be replaced quickly. Thus, the investment amount is at risk. Obviously, investors are not going to be excited about your company

Your company takes too much money to get to positive cash flow

Cash flow is an important factor needed to take into account when considering the success of the company. Positive cash flow indicates that the company will make a profit /return. In contrast, the more time it takes to get to positive cash flow, the more time investors need to wait to get their return.

Your company is operating in a market that has low barriers to new entries

Operating in a market that has low barriers to new entries means your product is replaced easily. The competitiveness is extremely high. There is nothing that can warranty that you will win in the competition. Thus, there is a high probability that investors will lose their money.

Investors have already invested in a similar business

Rarely do investors invest in two similar companies in the same period of time. Two-in-one-industry is a kind of competitors. If investors invest in two similar companies, they are competing themselves. And in the end, investors will lose their money anyway. 

Founders of the company are not passionate enough

The human factor is important. Your idea may be too good to make a billion-dollar. However,  the way you illustrate and describe your idea can lose the hearts of the ventures because it couldn’t express your passion. In short, a true love kiss can save a princess but a true lie can kill the whole kingdom.

No matter what happens, keep in mind that you have a great business. It just sometimes you meet the wrong investors at the wrong time. Be patient and keep searching for the right person.

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