Sometimes No Is the Beginning, Not the End
At a time when many fund managers and founders are encountering a lot of rejection, some thoughts on how to think about life on the other side of the no.
Earlier this week, I spent a bunch of time on the phone with a fellow VC who had just gotten what felt like a crushing no from a prospective investor. My friend had spent a lot of time talking to this prospective investor and was angry and deflated by the no. This person asked me how to handle that no and what to do next.
I lead all of our fundraising at Precursor, so when people say no to our fund, they are saying no to me without anyone in between me and the no. I have felt that surge of anger and frustration when people have said no to investing in our fund in the past, mainly when I felt like we were trending toward a yes. I run a solo GP fund, so that “no” can feel particularly acute because I am both the person pitching the fund and the person whose judgment I’m asking them to back; there is nowhere else to place the blame but on myself and their assessment on my likelihood to succeed. I have been on the receiving end of many “no thanks” conversations across the funds we’ve raised, and it’s just part of the process of putting yourself out there and trying to build something new.
As a venture capitalist, I give out a lot of “no” messages to founders who pitch me and receive a fair number of “no” messages from people considering investing in our funds. Being on both sides of what a no feels like and what can happen after the no has been fascinating. Over time, I have found some of those rejections have been the start of a relationship, as opposed to the end of one. I tried to boil this down into something simple when I was on the phone with my friend, and here’s what I shared on that call:
Sometimes, taking the ask off the table creates space for the relationship to grow and creates way more space for honest and open communication. Sometimes you need to get to that “no” to take the pressure off the relationship and change the context.
While my existing limited partners (LPs) and fellow VCs give me a lot of good input and advice on building our firm, I also have received some great feedback and advice from people who passed on investing in our fund. And, in almost every case, the quality of that advice increased with the distance from the “no.” As the question about whether they would invest in my fund faded into the past, it was much easier to have conversations without that subtext in the background.
People who passed on investing in Precursor have given me precise, pointed, and valuable feedback about improving my pitch and framing our fund strategy. Without an ask on the table or in the background, those relationships have become much richer and much more honest because there isn’t a pitch dynamic of me asking them for money.
Sometimes, the original “no” is one reason why someone passed, but not the most critical or real reason they said no. If there is something delicate or sensitive around why they passed, I’ve found that only comes out once there is some baseline level of trust that allows them to share that with the confidence that there is space to do so and that it will be well received. Those conversations are often easier after the decision has been made, not in the moment.
Some people who said “no” in one context said “yes” in another context. I’ve met a few people who said “no” to me while at one firm and later said yes when they moved to another firm or a new role where they had more freedom and flexibility to invest in a fund like Precursor. That original “no” was the correct answer in that context, and the context had to change to change the decision.
Sometimes “no” means “no, and not ever,” and you must accept that. Sometimes, there just isn’t space to move forward, and the answer is definitive and final. That’s just part of the process, and it’s important to recognize when a “no” feels and is very final.
People tell founders not to take the “no” personally, but that’s hard, especially considering how much founders pour themselves into their companies. You can both feel the pain of the “no” and still move past it. Sometimes, a “no” is the end, and sometimes, it’s the start of something more interesting.
Thanks for sharing this insight. Throughout my journey, I noticed many people in this space haven’t been told much in their lives. Based on their backgrounds, education, upbringing, etc., there seemed to be a lot of yeses throughout their journey! Nothing is wrong with that, but being told no is good. It builds character and makes for better people. However, there are ways to say no as well. Sometimes, I feel a lot of people in a position to say no abuse the power of saying no and come across rude and power-tripping.
It’s always fascinating to me to observe year after year that many founders/fund managers start connecting with funders right at the very crucial moment when capital is needed (in crisis or needy mode) , when they are in the Asker’s seat , while having set no or very limited foundation for mutual understanding , connections, and trustful communication.
What is being said at the Asking point in essence is : here is my work/project/offer and “it’s my way or the highway and it’s for now !”… and guess what ? In most cases not surprisingly, it's the highway !
There is no space allowed for co-creation, alliance, alignment, and partnership in this scenario. What "stakeholder " theory ? and who needs the flexibility afforded by shaping an idea or outcome congruent with a specific space/time/ecosystem context, even if it's to disrupt it? - sic, there is nothing more powerful than an idea which time has come.
The reason this often-observed behavior and process is bound to "No" is that it’s purely transactional and binary as opposed to transformational and generative. It is led by a human-group who, in general , has not yet become who they need to be to envision, create and evolve an offer that has the capabilities required for meeting the interest/needs of those groups living on the other side of any offer, be it the user, the consumer, the investor in the world of business for instance . Clearly such modus-operandi simply eludes the transformative nature of the pathway that brings ideas, concepts, or initiatives into existence which naturally find their place/application, inside the realm of the material world. Clearly, there is a missing piece.
In short , following the linear customary transactional "Goal setting-Plan structuring - Action taking" (GPA) process is effective and appropriate only once an intent has been supported into emergence so that it reaches its MVE (minimum viable evolutionary) stage, at which point, a timely and well-orchestrated GPA will usually accelerate its materialization and growth. Most initiatives skip the essential potentiation phase that allows for substance to emerge, and value creation to materialize in a suitably calibrated real-life offering.
The pillars and tools of systemic, transformative coaching as we define and apply them in our coaching practice are particularly designed to facilitate emergence as well as nurture further intentional, and sustainable growth pathways. We take a differentiated approach which when implemented by our clients allows them to contribute distinct solutions and extraordinary (ie : as compared to the ones commonly observed when applying linear standard models ) results in service to their clients, beneficiaries and society at large.
Finally, you are right charles , few can grow from NO … At a minimum, there is firstly the psychological aspect of Ego to take into consideration when facing the no-go (rejection) and secondly that of the merge or confusion between an individual’s essence or being and their role . These considerations could take me down an entire other rabbit hole .. but not this time. So, The No, I agree with you, is in fact the sign of what could be , if only it was allowed to emerge organically, with awareness about self and others , about the individual and the universal, about the intrinsic and the relational. Therefore, the No, I concur should be experienced with humility and gratitude for the learning opportunity, feedback, and growth potential it uncovers, ...