Why investors keep saying no to your pitch
Stephen Wools spent years wondering why investors passed on his ideas. The answer was risk, and he was only ever bringing them a cup of optimism.
For years, Stephen Wools pitched ideas to capital firms and to people with money, and they kept saying no. Rejection has never bothered him - he says openly that he does not give a stuff about it - but the why bothered him for a long time.
He worked it out eventually, and it is his second life lesson.
They were looking at one thing
Whenever he raises money or talks to private equity, the thing they consistently point at is risk. Not the opportunity. Not the ten things the business does well. The risk.
His description of the mismatch is the useful part. A Founder walks in with a cup of optimism, and that is what they are selling. That is the job, and investors are partly buying it. But optimism is the only thing in the bag, and the person across the table is running a completely different calculation.
Stephen's own reaction, in his words: they do not like my business because of that one risk factor, and they have ignored all these ten amazing things I do well.
What they actually wanted to hear
Looking back, he can now name what was missing. They were waiting for him to say: here are the problems that could occur, and here is how I am going to attack them.
Not instead of the optimism. Alongside it.
Why this is hard
Geo's background is in risk consulting, and his observation is that most people are simply bad at it. Optimism is easy because you only look at the upside. Sitting down and rationally listing what could go wrong, then building mitigations for each one, takes a kind of courage that pitching does not.
Stephen agrees, and does not exempt himself. He calls it the side he is still working on, and says he is not great at it. Six years into Ballers Clubhouse, his summary is that they went in with enormous risk and scaled with risk, and are only now getting better at pulling it apart and anticipating what is coming.
It is not really about the deck
The other half of what investors are assessing is you. Stephen's read is that they are asking whether this person will be all right when things go wrong - whether they will band-aid a problem or actually triage it, fix it, and preempt it next time.
A Founder who can name their own risks is already demonstrating the answer.