Entrepreneurs Deserve a Better No

Nicolas Sauvage
Jul 14, 2021 · 7 min read

Throughout the process of designing, pitching, and launching TDK Ventures, it wasn’t at all unusual for me to hear the word “no” from those with whom I shared my ideas, plans, and hopes. But I learned long ago to regard that word not as an endpoint but as an opportunity to deepen my own understanding. When entrepreneurs pitch the innovations they’ve been pouring their souls into for months (and in most cases years) and we decline to invest, all of us at TDK Ventures are committed to making sure that the “no” they hear presents opportunities for them the same way it did for me when I was getting TDK Ventures off the ground.

For most of us, the word “no” is an almost-automatic negative because of the way we were brought up and the culture in which we live and learn. My experiences, however, have taught me to think of it not as a negative, but as a signal.

The challenge, of course, is to make that signal as valuable as possible. If you’re the recipient, transforming what’s often categorized as rejection into something insightful and actionable requires you to ask questions in order to understand what’s behind the “no.” Otherwise, you probably won’t be able to improve in order to get to “yes” in the future.

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But I believe those who say “no” also have a responsibility when it comes to making that signal as rich — and valuable — as possible. In this article, I hope to convey why that responsibility is fundamental to what we aim to do at TDK Ventures. When we say “no” to an opportunity to invest, we want to enrich the signal as much as possible by telling the entrepreneur what we liked, as well as what we didn’t see in the pitch that we wished we had; we also want to acknowledge and explain why the opportunity isn’t right for us at that time, which often has everything to do with us and almost nothing to do with them. These are the things we’re striving to do each time we decline an opportunity to invest. We don’t have a perfect track record, but that is our ultimate goal.

The considerable time and effort we put into saying “no” is an important part of our continuous commitment to becoming an organization that takes a truly entrepreneur-first approach. Putting entrepreneurs first is one of our core values. Entrepreneurs are our customers, the heroes of our journey, and they are at the core of everything we do every day.

Entrepreneurs come to us with good intentions. Their vision is to innovate with technology in a way that benefits the world. It is our chance to give them quality feedback that will help them change the world.

Of course, it’s easy for me to talk about how important it is to say “no” in a way that’s valuable to entrepreneurs. But what really matters is what the entrepreneurs we’ve said “no” to have to say about the experience.

An important part of a virtuous circle

Murielle Thinard-McLane is CEO of Ontera, which develops platforms that use silicon nanopore chips and proprietary biochemistry to accurately detect and differentiate single molecules. The company aims to help transform point-of-care testing and third-generation sequencing. She worked closely with Anil Achyuta, TDK Ventures investment director, from whom she heard “no” on two separate occasions.

“Anil spent a lot of time with our team and with the TDK Ventures team in order to really understand our process and to understand if the technology was in their foundry,” she says.

It turns out TDK didn’t have the complete package, and would have needed to invest in additional equipment, which was not possible. Murielle also approached TDK Ventures regarding collaboration opportunities, but after careful investigation, it was determined that TDK simply didn’t have the capacity at the time. Still, she credits TDK Ventures with helping Ontera become a better company. “They contribute more than money,” she says.

What made her experiences with TDK Ventures stand out was the transparency. “It was all very clearly communicated,” she says. Clarity, however, was only the beginning. “Anil passed on the investment, but was helpful in making connections. He met with another strategic investor he thought might be interested in us and made the introduction.”

This is what we call TDK Goodness — which is how we partner with and support entrepreneurs in ways that are above and beyond financial investments. “This is important because as an entrepreneur you need a lot of investors,” Murielle explains. “It’s not a single shot.”

She says she also views the way we declined opportunities as an important part of a virtuous circle. “As an entrepreneur, based on our experience, what we’ll say to other entrepreneurs about TDK Ventures is: Here is an entrepreneur-friendly investor,” she says. “We vet our investors the way they vet us.”

In the end, packing as much value and actionable information into “no” is more than common courtesy: It is an opportunity to contribute to society. “Time really is money, so I appreciate them being so clear and candid,” says Murielle. “This is a feature that sets them apart. I really appreciate the level of detail they go into because I know they see a lot of deals every day.”

Below you’ll see screenshots of two of the emails that Anil sent to Murielle, each of which demonstrates that a message does not have to be long to be valuable.

Beyond a richer signal

Divirod, the company founded and led by Javier Marti, is committed to delivering unrivaled water data in order to protect against water risks in every form. Javier’s interactions with TDK Ventures consisted of open and honest questions and answers, active listening, useful feedback, and, ultimately, a discussion of the reasons why TDK Ventures had decided not to invest, primary among them that TDK is not in the water space.

While that may on its surface sound typical, it’s anything but. “As entrepreneurs we have to go through hundreds of calls before we get something useful,” Javier says.

Naturally, I want to know why. I realize this is harsh, but Marti’s answer is something from which all of us can learn: “A large percentage of VC people do waste the time of entrepreneurs,” he says. “The answers are vague. The net you’re aiming for is always pushed further and further away. As entrepreneurs we are often confused into thinking we’ve found a good lead, and it turns out to be a tremendous waste of time.”

TDK Ventures, according to Javier, is one of the first to offer an honest and prompt answer as to why his company was not at the time a good fit. “We talked to a couple of people Anil introduced us to,” Javier says. “Although it wasn’t someone Anil had introduced us to, we did find our investor. What Anil did was take the time to explain to us how we needed to be both strategic and tactical in how we talked to investors, which was valuable. Even though TDK Ventures decided not to invest, Anil is easily in the top 10 VC people we’ve worked with.”

In conveying what’s valuable about TDK Ventures’ approach, Javier gets right to the point. “As an entrepreneur, if you’re not doing the right thing and the right time and right place, you are going to die,” he says. “That’s why it’s so valuable to work with a VC that stays focused and to the point. The time and energy you’re dedicating to one VC is time and energy you cannot dedicate to another, so you must use it wisely. You can always raise money, but you cannot raise time.”

Consider your impact

To be completely honest, it’s beyond gratifying to hear from entrepreneurs Murielle Thinard-McLane and Javier Marti that the way we handled declining opportunities to invest in their projects proved valuable to them. Both of their startups are striving to make meaningful contributions to society, and I speak for all of us at TDK Ventures when I say we’re honored to be a small part of their stories.

At the same time, saying “no” in a way that’s focused on helping an entrepreneur succeed also benefits TDK Ventures. If you’re an investor, I hope you’ll consider the impact you have on the entire startup ecosystem each time you decline an investment opportunity. At TDK Ventures, for example, of more than 2,000 companies we’ve considered, we’ve actually invested in only 17. Because the reality is that we have to say “no” more than one hundred times more often than not, it’s likely one of the things we’re known for among entrepreneurs, which means it’s critical to get it right. While we sometimes miss the opportunity to provide feedback we hope is valuable, we are absolutely committed to continuing to improve as we strive to help entrepreneurs around the world.

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TDK Ventures

TDK Ventures invest in — and serve — early-stage innovative hard-tech startups

TDK Ventures

TDK Ventures invests globally in early stage hard-tech entrepreneurs to help accelerate their dreams toward an attractive and sustainable future

Nicolas Sauvage

Written by

President of TDK Ventures, investing in — and serving — early-stage hardtech innovative startups

TDK Ventures

TDK Ventures invests globally in early stage hard-tech entrepreneurs to help accelerate their dreams toward an attractive and sustainable future