← Techstars Blog

You’ve poured your life savings into getting your startup off the ground, hustled like hell to get to market, and called in every favor you’ve ever earned to get a bunch of meetings with investors.

But they all said no. Now WTF do you do? Here are some options:

Option 1: Shake it off and carry on.

Let me start with the assumption that your startup is not a quick built-to-flip app that you don’t really care about— instead, let’s assume that what you’re building is a calling, a mission. It’s something that you believe in with every last fiber in your body. Right? Right?

If so, then rejection from investors should be immaterial… a tiny speed bump on the road to bringing your vision to life. In startup-land, rejection is the norm, not the exception— look at Pandora, where Tim Westergren was rejected from 300 VCs before finding a taker and eventually leading the company to an IPO. In short, if your startup is your mission, then nothing will stop your forward momentum. Repeat this mantra after me: “I am relentless.”

Option 2: Improve, iterate, and re-engage.

When a VC firm passes, it’s often not a firm “no”, but a “not right now”—phrased as, “I like what you’re doing but you’re a little early for me.” Though it can be hard to re-start the conversation later, determined founders gather feedback from unsuccessful pitches and use it to improve the product and gain traction. Bouncing back from rejection means you have something to prove, and that’s often a good thing. Just make sure that when you re-engage, you’ve got a new story to tell (e.g. a successful product pivot, up-and-to-the-right growth, etc.).

Option 3: Look for alternative funding sources.

Some deals just aren’t “venture style” deals; increasingly, VCs are hunting for unicorns (defined as a startup that can quickly scale to a billion dollar+ company). Thus, if your business is not a baby unicorn, it might not make sense to chase venture capital as a source of funding.

Instead, expand your funding universe to include:

Angel Investors: while most angels are looking for companies that have the potential to become a home run, others are inspired by deals that can be “doubles or triples” and that have a lower risk profile or that will exit early. Still others are motivated by non-ROI reasons such as being involved in an innovative new industry or by seeing a particular product vision come to life. Ask probing questions to find out what moves the investor, and tailor your pitch accordingly.

Crowdfunding: sites like Kickstarter and Indiegogo have opened up a huge new capital channel by enabling “pre-consumers” to finance your business. Essentially, “backers” pledge varying amounts to your crowdfunding campaign, and in return they typically receive your product plus various “perks” such as recognition or delivery of the product before it’s available to the general market. Hardware startups and startups built around an already-existing fanbase tend to perform best on these sites.

Cash Flow / Bootstrapping: In the same vein, if your users like what you’re doing, turn to them as a means of financing for your startup. As old-fashioned as it sounds, “bootstrapping” simply means funding your business by selling a product or service for more than it costs to make, and then using the resulting free cash flow to grow the business. Even better is when you can collect payment upfront and then deliver the product later, like Dell Computer does; this creates a highly favorable cash flow cycle. Either way, using your own cash flow is the ultimate way to maintain control over your startup’s destiny. When you bootstrap, your only “boss” is the customer.

Factoring: Factoring is conceptually similar to crowdfunding, in that you’re using customer demand to get cash today; but instead of a pledge to “backers” you’re using accounts receivables as collateral for a loan. Factoring firms are common and easy to find, but the caveat is you’ll pay significant fees for the cash advance— often 6-10% on the dollar of the advance, depending on the length of time until repayment and the credit worthiness of your customers. Other variations of this include “revenue loans” with payments tied to a recurring subscription model (such as a SaaS business).


There’s an ocean of money out there beyond venture capital— it’s simply a function of finding sources that best match with the attributes of your business. If you have “fans” then it’s crowdfunding; if you have cashflow, then it’s factoring or bootstrapping, and so on.

When in doubt, focus on improving your product and making customers happy— do this long enough, and funding sources will start looking for you.


Nathan Beckord, CFA is CEO of Foundersuite, a San Francisco-based company developing productivity tools for entrepreneurs. Foundersuite helps startup founders with ideation, fundraising, investor relations, PR and more. www.foundersuite.com