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by • April 28, 2014 • Funding & investmentComments Off1309

To the teams currently being rejected by YC

It’s hard to internalise exactly what a VC (or even YC) rejection really means. But here it is: it means nothing. An acceptance holds some information, since it shows you’ve passed a minimum threshold. But a rejection? It doesn’t really tell you anything. Investors turn down lots of companies who meet their standards, sometimes because they make a mistake and sometimes because it’s the wrong fit (sector, stage, etc). Both of these rejections are relatively easy to handle emotionally, since you can rage against the former (“we’ll prove them wrong!”) and rationalise the latter (“it was never going to work anyway”).

But there’s a third deeply frustrating type where you know you’re a good fit and pass their standards and yet it still doesn’t work out for some stupid reason. And to be clear, every reason here is stupid. Maybe they’re tired, or you are, or their kid is sick, or you’re talking to the only person there without relevant industry expertise, or you didn’t have enough time to explain, or they didn’t ask good questions, or the sun was shining in your eyes, or the demo broke, or they didn’t like your slide template, or who even knows. There doesn’t even need to be a reason. It just didn’t work out. And the investor’s business model didn’t need it to. To stay in business, they only need to fund enough good companies. They aren’t obligated (or able) to fund all of them.

The most infuriating part isn’t even the investors. It’s the other founders who have already been funded. Folks who benefit from luck tend not to notice the role luck played, so they’ll give advice (and pass judgement) as if the whole process is under your control. And long-term, sure, you can swing things. Over a reasonable period (say 3 months and 50 relevant investor conversations), most good companies can get funded if they’re so inclined. That’s enough tries for the randomness to even out. But you can never control the outcome of a particular pitch or meeting. This creates an especially rotten situation when “celebrity” investors like YC exist: you’re dependent on a single meeting, at the mercy of huge randomness, and can’t improve your odds since there’s only one of them.

It’s the perfect storm of a frustrating situation, but that’s the industry. Getting hung up on the results just isn’t useful. It’s as silly as someone losing a big poker tournament and then moping about how they wasted their entry fee or endlessly fantasising about how great life would be if they had won. Fundraising is the same way. It’s an expensive and time-consuming process, especially if you’re flying around. Obsessing over the costs and outcomes of a single meeting is a recipe for regrets.

And here’s the tricky bit: although these unjust rejections are truly super frustrating, they’re just not important. There’s no data in the rejection. But there is danger. Everyone else you deal with (investors, partners, customers, employees) will mirror your emotions, so if you’re all mopey and talking about how “we didn’t get in” then the bad luck is going to keep on coming. Yes, life would be better if it had magically worked out. But it didn’t. So what? So nothing. It’s only a big deal if you make it one. Get back to the business.

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