When I’ve spent time with a start-up and have reached the conclusion that it’s not quite the right fit for an investment I try to provide what I call a ‘good no.’
What I mean by this is to explain why I have reached my decision and reiterate some of the same feedback I will have given in previous communications.
I also try to keep in touch with the entrepreneur and offer to help in other ways if I can. For me this is all about my reputation and my network. My business is all about attracting the very best entrepreneurs and the more I have in my network the more likely this is to happen. There are many ways we can be useful to each other in the future, outside of an investment. It also leaves he door open should the start-up develop in such a way that makes it a possible investment in the future.
Another benefit of a ‘good no’ is to see how the entrepreneur reacts. I believe a good entrepreneur will take time to understand the feedback. They will also try to challenge the feedback or say what they are doing to address it.
A good entrepreneur will also see the value of maintaining the relationship and often provide a regular communication moving forwards. As and when the negative points of feedback have been addressed, or they have reached milestones that I’ve said would need to be hit, they will be banging down my door to get another meeting in the diary.
But above all else is attitude – to listen, learn, respond and then get on with building the business and proving me wrong. I love to be proved wrong. The more successful entrepreneurs and start-ups there are out there the better it is for all of us.
On the flip side are entrepreneurs who just don’t respond or who seem to take a no personally. This is a major alarm bell for me. It is a strong indicator for how they are going to run their business.
Decisions are rarely personal. They are made in good faith and with the information available.
I definitely used to take feedback too personally. I also used to not invest the time to maintain relationships, believing I was too busy for the ‘non-believers.’ Over the years I think I came to understand that this was not the best approach.
Building a business is a difficult thing. It is made even more difficult if you start taking things personally or break relationships that might be useful to you down the road.