If you get rejected by a venture capital firm, you have to remember that it’s not the end of the world. While it may seem like a huge door shutting in your face, the truth is that there are other funding sources. Keep that in mind because it’s easy to get discouraged and you might let your mood be affected so much that you eventually lose your passion and drive for the project. You have to remember that you did not start your company just so you can get VC funding. VC funding is just part of the process. It is not the end goal of starting a business. The reason you started your technology startup is that you want it to turn your idea into reality that you can see, touch, smell and be proud of. Being turned down by VCs is just a bump in the road. You have to look at it that way.
What do you do if you get rejected by venture funds? First, you need to turn to angel investors. Angel investors are everywhere. They can be your lawyer, doctor, accountant or if not you can approach their friends. People are always looking for compelling investment opportunities. There is a lot of people that are amazed by the fast moving technology space so that is your ace in the hole. There will always be people interested. It’s your hob to make a compelling presentation so that these angel investors can invest in your company.
The second approach is to try crowdsourcing. There a re many crowdsourcing funding sources available online. KickStarter is just one and AngelList is another one. There are many ways— you can use an email list or a linked-in group to try and drum up small streams of money that can add up into a large pool of cash that it can fund your company’s development so your product can get to the next level.
The third approach is probably much harder but it’s the best. This approach involves taking your business and fully developing it so that it achieves profitability. In other words, develop small parts of your business that can develop positive cash flow. Aggregate them until it produces a nice profit base. Keep scaling it up and keep reinvesting that money in until you reach a nice enough size and you can then talk to VCs again. As the old saying goes, success has many fathers; failure is always an orphan. The venture capital firms would basically see that your company has already taken, grown and proven its model and it is making money. They basically just need to put in money so you could scale up and then take it to either acquisition or IPO.