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Saying NO to a million dollars

As a CEO/Founder of a startup, you seek to raise $1 million dollars. Everyone says yes to invest and you get the money. However, your company is valued at $1 million - should you be celebrating?

Often, many startups have struggled to get a right valuation and share dilution. It is tough trying to balance the need to keep the lights on versus the loss of company control and payout. Investors take advantage of this to get a bigger stake at a lower valuation.

If you are at this point, you should call off the party and say NO to the investment.
Every NO gets you closer to a YES

In most sales bibles, it is decreed “every NO gets you closer to a YES”. The more people you pitch to, the more doors you knock on, the more cold calls you make, and the more sales you will close. Don’t be afraid to be turned down by investors or turn them down. Keep knocking on potential investors’ doors and you will get there.

There is the much fancied “80/20” rule, where 20% of who you speak to will give you 80% of your desired funds. If you need $200,000, you need to speak more than 20 potential people about it and you are likely to 4 - 5 investors to commit the amount. kNOwing when to stop

Raising more money for your startup is absolutely critical to keep the business going. It is also necessary to know when to stop.

When you raise the same amount as your valuation, you no longer own your company. Why give away so much of your company which you built from scratch? Fund raising efforts should aim to keep valuations at levels that leave sufficient portions of the company to the founders. Ideally, only losing 15% - 20% per funding round and having 25% – 30% when the company IPOs.