Investors Said No, Now What? | Summary and Q&A

TL;DR

YC group partners discuss the common lies founders tell themselves when faced with investor rejections and emphasize the need to believe in their own expertise and progress.

Key Insights

• 🚀 Founders often place too much weight on investor rejections, even though they are the experts on their own products and markets.
• 🔍 Investors may have limited knowledge and insights about a startup's unique offering, making their reasons for rejection less credible.
• 💡 Investors who quickly change their minds after a pivot or significant change in a startup's direction may not be reliable or have genuine conviction.
• 😰 Founders tend to believe that rejection is due to their market size, when it could be other fundamental issues such as lack of a technical co-founder or negative margins.
• 📈 Investors are often assessing founders based on their ability to build and lead a successful organization in addition to the potential of their idea.
• 🔄 Consistency in rejection reasons from multiple investors should be a signal for founders to assess and possibly make adjustments in their approach or product.
• 📌 Investors may reject a startup initially, but be more interested later on if the founders have made significant progress and can demonstrate tangible results.
• 🗒️ The best approach to rejection is to believe the "no" but focus on making concrete progress to change investors' perception rather than trying to convince them with words or explanations.

Transcript

investor spends two minutes writing the email and then later hears that you've pivoted your entire company because of it right not a huge signal of uh conviction hello this is michael with harj and brad welcome to inside the group partner lounge so as yc group partners we find ourselves repeating the same often seemingly obvious advice to founders ... Read More

Questions & Answers

Q: Why do founders often believe that investors know more about their startup than they do?

Founders tend to put investors on pedestals, assuming that they must be experts based on their professional backgrounds or vague knowledge of the market.

Q: Should founders take rejection at face value?

No, founders should take rejection as feedback to assess and consider, but not internalize. It's crucial to critically analyze the reasons and focus on improving the business rather than becoming demoralized.

Q: How can founders convince investors to change their minds?

Rather than relying on words, founders should focus on making tangible progress in their business, such as closing new customers or achieving significant milestones. It is through actions that founders can change investor perceptions.

Q: Why is it important for founders to believe in themselves and their expertise?

Founders are the experts on their product, market, and vision, as they have dedicated significant time and effort to building their startup. Relying too heavily on investor opinions can undermine their confidence and decision-making.

Summary & Key Takeaways

• YC group partners discuss the common lies founders tell themselves after facing rejection from investors, such as believing that investors know more about their startup than they do.

• Investors often lack deep insights into a startup and may only have a passing understanding of the market, making their reasons for rejection unreliable as a basis for decision-making.

• Founders should not internalize rejection and instead focus on making progress in their business, as tangible progress is a better signal to investors than attempting to change their minds through words.