Ending graciously

"I don't recall this being part of the original pitch or my strategy. I probably just blurted it out to break the ice, but it impressed the investor. He told me it was refreshing to speak to an entrepreneur who was not blinded by his own pitch. The fact that I had a scenario ready for both success and failure told him that I was honest and realistic."

"Now, the startup was not successful, but we still had a nice, opulent dinner with the investors at the end - and we did them one better. As soon as we realised that our predictions and expectations were wrong, we made our investors an offer: we could struggle and pivot and hope for a miracle, or we could return what was left of our funding to our investors. We preferred option two, and so did they, so everybody got some money back (about 40% of what they had invested), as well as a lovely evening with excellent food and drinks."

During a fundraising pitch an entrepreneur acknowledged the possibility of failure and even joked about spending remaining funds on a farewell dinner for investors. That candid admission convinced an investor that the entrepreneur was honest and realistic, not blinded by optimism. The startup ultimately failed, but the team chose to return remaining funds rather than pursue a risky pivot, recovering about 40% for investors and hosting an opulent farewell dinner. The transparent handling of failure preserved trust and led most investors to back the founder’s next venture. The Next Web, founded in 2006, is nearing the end of its lifecycle.

Read at TNW | Ecosystems