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Access to Finance

Early-stage fundraising and the reality of ‘no’

Early-stage fundraising and the right investors can propel your businesses growth and secure its future success. The reality of rejection in the fundraising process, however, is common - but not the end.

Access to Finance team leader, Ian Dixon, shares his insight on how to use every opportunity to learn, develop and be better placed for your next pitch.

Have I got the right idea?

Fundraising is arguably the most important and most difficult step of any start-up’s journey. Presenting a compelling pitch to potential investors takes skill, practise, and an ability to demonstrate an in-depth knowledge of your business and its potential in an engaging manner that is easily understood by your audience.

Raising money is tough and just because an investor says ‘no’ to your proposition it doesn’t mean you have a bad business, or the wrong idea. It can often mean that you haven't been able to relay to the investor what exactly it is that you are envisioning and what is actually on offer. Find out if this is the case by asking investors directly. Work on your pitch to help bridge gaps in investor’s understanding so they can see what you are seeing. Paint the picture for them as clearly and as obviously as you can.

Be prepared to hear the word ‘no’... a lot! This is the reality for many, if not, all start-ups. Have the resilience to keep going despite this and be aware that some investors just won't get it. You can’t expect everyone to be excited or interested by your proposition no matter how good it may be. Many investors have personal interests and particular areas of expertise and experience, making it even more important that you choose to spend your time and energy pitching to the right ones. After all, if you do secure investment, the investor will be with you for the foreseeable future and having someone on board who is in line with your vision and understands your industry and market space is critical if you are to have a cohesive, fruitful relationship. You will be ‘stuck’ with your investor so choose wisely!

What can I learn from an unsuccessful pitch?

The challenge for founders and entrepreneurs is getting to a ‘no’ sooner rather than later, and using the opportunity to ask open questions, obtain and absorb feedback - learning and understanding why and (if appropriate) adapting the proposition.

The nature of ‘no’ is communicated in many ways by investors. You may hear phrases like, “we will monitor your progress”, “let’s revisit our conversation when you have...”, “come back when you have launched...”, “we can discuss when you have generated £x or developed a user base of x amount”. “It’s not you, it’s us” scenario. The list goes on. These are usually ways an investor is politely declining your proposition. Often, this does not help founders / entrepreneurs, as it creates false perceptions about the validity and value of their business ideas and false future expectations. Getting to ‘no’ certainly proves a challenge.


  • Research potential investors in advance.
  • Prepare a list of open questions to explore in greater depth feedback received
  • Pro-actively listen to the feedback and ensure you understand
  • Be resilient and learn for future conversations

Do not leave a conversation with ambiguity. The matching process of the right investor to the right entrepreneur can be a long and hard road. Before you decide to raise funds, be sure to have thoroughly validated your idea and have demonstrable traction. This will save you and the investor precious time.

What’s out there and available to my business?

One of the fundamental reasons a start-up fails is the inability to raise funds. To survive and continue growing requires capital and many founders fall at this hurdle as they don’t have an adequate grasp of the fundraising process.

The finance options available to start-ups has increased hugely in recent times and there is a lot to consider when choosing the right option for your business. Filtering through all the information isn't easy and building your business with so many resources to hand can make it difficult to understand where to begin. Location is no longer an issue - with global availability of both investors and start-ups accessing funds and ideas is now an international operation with collaborations taking place the world over.

There are a whole host of funding options: from angel investors, grants and peer to peer finance to venture capitalists and crowdfunding - understanding what’s available and what works for your business is pivotal to any future success, and being aware of what these investors are looking for is paramount. You must be able to clearly and definitively explain why the target market needs/wants what you are offering, as this will provide the insight required to determine if and how your business can grow.

What’s most important to a potential investor

The reality of funders’ decision-making is often complex and driven by factors entirely outside the control of entrepreneurs. This can include an investor’s reluctance to potentially miss out on the ‘next big thing’, meaning there is a constant monitoring and revisiting of your idea without actually investing. The investor may also have, and very likely does have, an existing portfolio (or planned pipeline) of investments which could cause a conflict of interest or reduce their capacity and willingness to invest in another similar project even if you have a great proposition. The potential liquidity constraints and a lack of smoothness in deal flow present further reasons an investor may choose to say ‘no’ - again, this is not a reflection of the validity of your idea, rather a personal calculation every investor must make.

On a positive note, and in an effort to develop transparency and efficiency, some investors are now publishing qualifying criteria on websites to streamline deal-flow and avoid the above conversations.

The importance of numerical data and evidence-based facts cannot be denied. They form a significant part of any proposition and will have a huge influence on any investor's decision making. They are the facts with which an idea and understanding of a business and its potential are based. However, it is sometimes the intangible (the things that make up a proposition that can’t be put into numbers and are more abstract than a data sheet or PowerPoint presentation) that investors find themselves drawn to. The way you work together as a team, the way this is displayed in how you communicate with each other and to the investor, the knowledge, understanding, passion and insight you have that positions you uniquely above the rest, the conviction and credibility with which you come across. An investor looks for quantifiable growth and other tangible indicators, but it is the overall feel of the team (and the belief in that team's ability to deliver what they are proposing) which ultimately determines an investors decision.

In my experience the biggest reason, and often the ‘white elephant in the room’, is you and the team. Legendary early-stage VC investor Mark Suster of Upfront Ventures summarises perfectly the reality:

I am fond of quoting that about 70% of my investment decision of an early-stage company is the team. My rationale is simple: everything goes wrong, and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Mark Suster

If you are based in Greater Manchester or Lancashire, you can access fully funded, tailored support through the Access to Finance team which has significant knowledge of the funding landscape and extensive relationships with:

  • Business Angel networks   
  • Venture Capital
  • Public Sector Funds
  • Alternative emerging sources such as International Investors (via UK Home Office Innovator Visa’s)
Contact the Access to Finance team

Ian Dixon

Ian Dixon, Senior Business Advisor - Access to Finance

Ian is responsible for the management and development of the Hub’s team of A2F specialists. He is a chartered accountant with extensive corporate funding experience and knowledge, developed predominantly within the SME market. Former commercial roles have included financial director, process improvement director and business development director, and he has acquired an in depth knowledge of various forms of finance, including all types of debt and equity, and the processes involved in raising funds.

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