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When a firm is ready to make a deal, the next steps can range. In the second or third meeting, you delivered your formal pitch. You’ve asked questions, and so have they. You’ve told them what you’re expecting on a good deal and what you want for a valuation. You could get an email summarizing these numbers, with a few bullet points and a simple message, “If you guys are in, let’s add lawyers.” Usually, though, you’ll get a call. If things have been going really well, it could be 30 minutes after the partner meeting. “Hey, it’s us, we’ve decided we want to invest. We’re going to send you a term sheet. We think we’ll do $3M on a $12M pre. Once your lawyers check out what we send, let’s schedule a time to go through it.”

If you’ve been performing strongly and have received a few term sheets or have had serious meetings with a few competitive firms, you’ll want to say something like, “I’m expecting to hear back from Greylock in the next few days, so when I get word I’ll be ready to go through everything.” When you get a term sheet from a competitive investor, you can go back to other firms you met with, whether or not they have offered you a term sheet yet, and start to generate some leverage for negotiations through FOMO: “Greylock just sent me a term sheet.” Now the investors are going to be clamoring to make you a good offer.

Handling Rejection

“No” is something you’re going to hear a lot. Investors can lack imagination, operate with bias, and be flat-out wrong (just read the emails from investors who passed on Airbnb). But try to consider every rejection as an opportunity for improvement. It’s possible that your pitching style, demeanor, attitude, or research strategy needs work. It’s possible you’re pitching the wrong people and need to revisit your target list. Whatever your situation, stagnant founders who blame a series of “nos” on anyone and everyone around them are not likely getting closer to a “yes.”

Trust the No but Not the Reason

Rejection is general feedback—investors rarely share the exact reason they passed. It’s commonly seen as more work than it’s worth to provide detailed feedback to every founder that walks out the door. (Enough founders made a habit of rebutting investors’ feedback point-by-point despite investors’ mind having been made up.) On the other hand, some investors don’t know why they’re passing beyond having a bad feeling about a company. Know that investors probably aren’t trying to be malicious or deceitful when withholding a firm reason, they’re just people trying to do their jobs without creating more work for themselves.

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