The 5 “No’s” to expect while
raising seed capital

Some call a “No” the next best thing to a “Yes” when you are fundraising. Part cliché, part true, in my opinion. Because a “No” is only valuable if you understand it. Otherwise it can be a huge time waster. And getting a clear and fast “No” from angels and VC’s is not always that easy.

Before we got a firm “Yes” we got our share of “No’s”. Here is my personal guide to the land of “No” when you are raising seed capital.

I have found basically five kinds of “No’s” - and I have come to truly respect two of them
and found ways to deal with the others:

1. The “No” in advance. This kind of “No” you get on angels’ and VC’s websites, in interviews and other sources like Quora and Formspring. Here are some examples:

  • “We never invest outside the US”
  • “We only invest in B2C”
  • “We have never invested in a company which hasn’t been referred to us by someone we trust.”

This is their strategy, and that must be their call. These people saved me a lot of time by stating their preferences. I respect that and will not bother them with my pitch if it doesn’t fit their criteria.

2. The silent “No”. At their website they encourage you to send your business plan. Then you  never hear from them. There is a fundamental communication problem here:

  • The angel/VC thinks that he is sending the signal: “We are flooded by deals and actually don’t have time to answer all, even if we would like to”.
  • But the entrepreneur might think that the signal is: “Your idea/team/plan is so bad that it is not even worth an answer”.

Waste of time for the entrepreneur and bad marketing for the angel/VC.

3. The clear and fast “No”. The angel/VC has looked at your start-up, maybe met you and quickly gives their reason for saying no. This will save you a lot of time and sometimes you get valuable input from their answer. Both parties build respect and network.

4. The slow “No”. It can sound like this: “This looks very interesting but we would like to see this, this, this and that.” When you are raising seed capital you just don’t have the time or resources to do too much else than focus on your core development. Unfortunately not all investors understand and respect this. To understand when you are wasting your time is key in this process.

5. The “Yes” that is really a “No”. It can sound like: “Yes, we are very interested, but not right now because we are so busy.Can you come back in two months?” Keep you hopes down when you start hearing the phrase “not right now”.

So here is an appell to all angels and VC’s, who I know really care for entrepreneurs and start-ups:
A. State selection criteria - On your website or wherever a search engine can find it, state your true first selection criteria,  typically: Location, Sectors, Referrals, Stages, or whatever selection model you are using. This will save you and the entrepreneur lots of time.
B. Deliver your “No” answers clear and fast - It will give you respect in the entrepreneur community and bring you valuable business in the long run.

How to raise seed capital in Europe: "Secret" 1

Most advice when it comes to raising seed capital focuses on the pitch, the slides and the business plan. What to say and how to say it.

But fundraising is not only a pitch - it’s also a process.

"Secret" 1: Raising seed capital is a sales process.

Accept that raising capital is a sales process. You are selling yourself, the team, your idea, your vision, business concept and prototype. You are selling your stock in return for cash, network and advice. You are selling an option to future value. In short: You are selling.

If you approach it as a sales process - what are the consequences?

Sales is to an extent a numbers game. You should use the classic sales funnel when you are about to start raising seed capital: The more good "prospects" (potential investors) you put into the funnel, the more "sales" (investments) you get out in the other end.

  1. The cold prospect list. This is the key to success. Without it your reach will be too limited and you won’t get to dance with the investor of your dream.
    • At the top you put your dream investors. Then you add another 20 angel or VC’s. Don’t write only their company names. You will have to identify the individual person and his or her email address.
    • Craft and send the pitch email to the first ten. In Europe most of the potential angels and VC’s will read your email even if you are not referred.
    • Don’t bother calling them before they have read your email.
  2. Existing contacts. Your existing contacts are your best shots, but they are probably very limited in the angel and VC community. So make the most out of these contacts:
    • Walk through your list of contacts and ask yourself: “Who does he/she know in the angel/VC community?” (LinkedIn if possible)
    • Take meetings with your contacts even when you think the chance is small that they can help you.
  3. Generate new contacts. Network as much as you can and as early as possible to gain more contacts.
    • Attend start-up contests, conferences, international and local events for entrepreneurs.
    • Ask every one you meet and talk to: “Who do you think I should talk to? Can you refer me?”
    • With this sales approach you add a quantity focus, which I believe is important at least in Europe where the VC and angel market is less mature than in the US.

If this is your first professional "sales tour", there are another two positive consequences of regarding  fundraising as a sales process:

  • You demystify the topic. A lot of entrepreneurs get scared by the fundraising; they don’t think they understand it and they see it as a major obstacle. But selling is easier to relate to and feel confident about.
  • You are about to get a crash course in high level sales. Fundraising takes a lot of time, so instead of “wasting” the time, look at it as some serious sales training.

Can a first time entrepreneur really give any advice regarding fundraising? Well, that’s just it: I believe raising money the first time is a very different experience than doing it a second time. The second time you have your own experience, you have a track record and you have more contacts. The first time you usually don’t have much. Since we just succeeded with our first round of financing, I thought I’d share some of my experiences.

There is so much good advice out there so instead of repeating what others have said much better, I will just point you to some very good sources:

Chris Dixon,
Fred Wilson
Steve Blank
Great link collection:
And of course a lot of great answers on

Das neue Tool für Markenprofis