Feeling disheartened because yet another investor turned you down? You are not alone. Lack of investor interest does not necessarily mean your product sucks. It can only be one of many things – the investor does not align with your vision; or perhaps you are early in the market; or simply that you did not adequately articulate your proposition.
Finding an investor who aligns with your vision and is as excited about the business as you are, can be an extremely difficult proposition. Unfortunately, for most startups, the inability to find an investment at the right time can be the difference between life and death. But most successful startups too started the exact same way as you have. Case in point:
LinkedIn : In 2016, Microsoft bought the world’s largest professional networking site for over $26 billion. But thirteen years earlier, LinkedIn was a startup that was still finding its ground. The founder Reid Hoffman had previously had a successful stint at Paypal. That must have made the job of finding investors easy. Right? Not really. In this article on Fortune, Lee Hower, one of the members of LinkedIn’s founding team points out that his startup had to meet as many as 25 investors before they could gather their first round of investment.
LinkedIn is not alone. According to one study of the fundraising practices of over 200 startups, the average startup founders meet over 40 investors before they are successful in raising funds. The average number of investors they reached out to was much higher at 58.
Setting up too few investor meetings would mean you would have to revisit this process at a later stage if none of your meetings are successful. At the same time, setting up too many meetings would leave you with little time to actually work on your product which is extremely crucial in the early stages of your business. Seasoned entrepreneurs recommend a sweet spot of 30 investor meetings – this is large enough to help you secure a round without wasting too much of your time.
Reaching out to investors and meeting with them is only the first step. The actual time taken to close a round depends on the amount being sought and the kind of investors you are talking to. Angel investors typically take a couple of days to make a decision. Venture Capitalists on the other hand, can take several weeks to get back. The DocSend survey cited earlier in this article found that the average money sought was in the range of $1.3 million and it took around 12.5 weeks to close.