If there’s one question I always get it’s, “How do you approach raising capital?”
The ability to secure the necessary capital to fuel your business growth is paramount to any new startup or venture.
Yet for many would-be entrepreneurs, simply asking friends, family or investors to part with their hard earned cash behind their business can be the toughest personal challenge they face as a venture builder.
In the world of fundraising, rejection is inevitable, but it’s essential to view it not as a setback but as a stepping stone towards success.
In this blog, we will delve into the art of learning how to ask for capital, embracing rejection as a part of the process, and turning those investor ‘Nos’ into valuable opportunities for refinement and growth.
Learning How to Ask:
Asking for capital can be daunting, especially for first-time entrepreneurs. However, it’s crucial to view it as a skill that can be honed over time.
I still remember the first call I made to tell someone I was starting a business, and ask if they wanted to invest.
I asked them to meet for a coffee, sitting there the entire time sweating wondering how I was going to ask them for money. It felt all wrong, embarrassing and awkward. I pretty much convinced myself to not even bother—then all of a sudden, I did. How?
Think BIG, start small, learn fast.
I knew I wanted to raise a large amount of money but not from one person, or this person alone. So I made the ask smaller, tiny in fact. I told them what I was working on, and why. Then asked, “Would you invest a dollar in this idea?”
The next few moments were one of the longest — at least in my head — I’ve ever experienced.
In Noah Kagan’s book, Million Dollar Weekend he also recommends this strategy—teaching yourself to get comfortable with making asks of people.
Learning how to make an ask is a key skill of any entrepreneur. And yes, they can be hard, strange and daunting but if you don’t learn to ask, you’ll never know.
So how do you learn to ask? Simple. Make the ask easier, smaller, and safer (to start).
“Hey [insert buddy here], Would you invest $1 in this business and me?”
Like anything unfamiliar, uncomfortable or unknown the first time is frightening. Until it’s done. You get through it and survive. As you repeat, it’s less scary, and so on, and so on as you stretch your comfort zone, the size and scale of your asks.
Start by practicing your pitch with friends, mentors, or advisors who you respect and trust.
Confidence in your ask is key, so rehearse until you can articulate your vision passionately and persuasively.
Stop Being Afraid of Rejection
Rejection is a natural part of the fundraising journey.
I can’t tell you how many times people have said ‘No’, ‘Not for me’ or ghosted my attempts to get responses.
While it’s easy to let it get to you, or make you think it’s never going to happen you need to park such negativity and channel the belief you have in the vision you are set on creating.
Cultivating a mindset that perceives rejection not as a personal failure but as a temporary roadblock on the path to success is essential.
Each ‘no’ brings you one step closer to a ‘yes.’
Embrace rejection as an opportunity to learn and improve, recognizing that even the most successful entrepreneurs faced numerous rejections before finding the right investors.
Negative Feedback Helps Refine Your Strategy
Negative feedback, rejection, and hearing ‘no’ can be tough, but they provide invaluable insights into your business strategy.
Instead of viewing it as a setback, consider it as a guide for refining your approach. Tightening up your target customer. Even giving you the information to double down paths you sense that others are yet to discover.
When raising for Nobody Studios, countless private investors and professional capital entities told us they loved what we did, how we were going about yet couldn’t invest due to their fund policies, agreement with limited partners and domain of focus.
Every bit of information helped us refine and retarget where we needed to go.
Take the time to understand the reasons behind the rejection – is it the market, the team, the product-market fit, or perhaps the timing? There can be a host of reasons.
Use this feedback to iterate on your ask, target audience and strategy.
Very rarely is the pitch, position or ask I make on day one like what it’s like on day seven, thirty or three hundred and sixty five—it evolves.
Some People Never Ask, Don’t Let That Be You
Raising capital is a journey filled with ups and downs. By learning how to ask effectively, embracing rejection as a natural part of the process, and using negative feedback to refine your strategy, you can turn investor ‘nos’ into valuable opportunities for growth.
1. Start Practicing Your Ask
Begin by practicing your pitch with a trusted circle before approaching potential investors. Use their feedback to refine your message and delivery.
2. Yes or No, It’s Information
Treat every response, whether positive or negative, as valuable information. Learn from both acceptance and rejection to fine-tune your approach.
3. Refine the Target and Value Proposition
Analyze the feedback received and adjust your target investor profile and value proposition accordingly. Understanding what resonates with investors will increase your chances of securing funding.
Everyone Started With A Small First Ask
Remember, each rejection brings you closer to finding the right investors who believe in your vision and are eager to join you on your entrepreneurial journey.
Keep refining, keep asking, and success will follow.
And if you still need a bit of inspiration—how about the story from Steve Jobs of his first ask.
[ link video: https://youtu.be/zkTf0LmDqKI?si=j61y24AMEbh4SkdH ]