How to Stop "You're Too Early" Investor Rejections

This week's tip: what "you're too early" really means and how to reduce you getting it

In venture capital — as in many walks of life — we have our slang and overused phrases.

If you're a founder, there's a good chance that you've heard the most common one from investors:

“You're too early.”

When investors say “you’re too early,” it can be unclear what that means. Should you keep progressing on what you are trying to do, or does it have a completely different meaning?

Why do investors even do this? Why give a generic, unhelpful reply to you?

This is because of two reasons:

1. It allows them to keep a good reputation by giving you a soft rejection
2. It gives them the chance to speak to you again if you do end up becoming a unicorn

Win-win for the investor.

Zero gain for you as a founder.

Here’s 3 reasons for why that investor is really saying “you’re too early” to you:

1. You’re being told no

Unfortunately, the most common reason an investor will tell you that "you're too early" is simply a polite way of saying no. It is the easiest way to reject you without having to give you anything concrete on why. 

Entrepreneurs often think that if they can't give a good reason to say no, then the answer must be yes. However, VCs are people too, and sometimes they're just not excited about the problem you're trying to solve, they don't have a deep belief in you as a founder, they've seen variants of the same business plan a dozen times already that week, or they simply don't think they can add value.

For the most part, when you receive "you're too early" its a completely subjective decision on: "I just don't believe in this company enough". 

Investing means building a relationship that might last five years or more. VCs therefore want to connect with entrepreneurs and share their passion for what they're doing. If it's not something that excites them, they will pass, no matter how fantastic your idea might be intellectually.

This subjectivity means that saying "you're too early" rather than having to explain their reasons in detail is an easier way out to get you to stop speaking to them. This is usually just a 'feeling' of you aren't good enough.

But remember, rejections are normal and you should be pushing for them anyway.

2. You actually are too early

Sometimes, investors may be speaking the truth - perhaps you are too early. However, this goes beyond just traction. Many times, founders will come back after making progress, expecting that the investor will be impressed. Only to be rejected once again by that same investor.

Because even if you are actually too early for them, it is as much about you as a founder and your opportunity as it is about your traction.

Many founders seek investment solely based on an idea, without having a clear plan of action. It is essential to understand why you are building this startup, which customers you have spoken to, and what unique insights you possess.

Unfortunately, I come across many founders who lack an understanding of these crucial questions. When asked about the narrative behind their fundraising efforts, they fall short. There is no substance behind why they are pursuing their idea - it remains merely an idea.

Either you are not fully committed, you fail to grasp the underlying narrative of your opportunity, or you lack any evidence of why you will succeed. Investors want to see your unwavering dedication to solving a problem. They want to see that you firmly believe you cannot be wrong.

At Octopus, we would say that these founders have the determination to overcome obstacles and make things happen. Without that level of commitment, it is difficult for investors to take you seriously.

So when they say you are "too early," a lot of the time they mean that you, as a founder, are too early and they do not believe that you are in this for the right reasons.

3. You’re too late

Ironically, the phrase "too early" can have an opposite meaning. As an investor, I have encountered companies that appeared promising on paper but targeted sectors or problems that were already well-understood.

While you may have a unique and promising approach that presents a real opportunity, there are often already well-funded teams or a plethora of choices available to customers. Therefore, we need to see that what you are attempting to accomplish is truly a game changer - that you can surpass those who are "ahead of you." If we don't believe that you can achieve this and that you are entering the market too late, then we genuinely believe that you are too early in your journey to succeed.

However, if you can effectively communicate your founder and opportunity narrative, the notion of being "too late" will become insignificant. If your investors truly believe in you, it won't matter that others have a head start.

So how do you reduce “you’re too early” rejections?

There is a common thread in all of the interpretations of being "too early" for an investor: a lack of conviction. Conviction begins with being gripped by the team or the idea, and only then comes the search for evidence to support it.

Emotions come first, logic comes second. 

It always happens in that order, so it must come from your narrative (founder and company narrative).

Of course, this is the challenge with early-stage investment. It's also why your competitors may receive investment even if they have less traction than you. But if you hear "you're too early," try to get more feedback on the real reasons for why they said no.

Push back and ask the exact reasons. But remember that even if you do get better feedback, realise that you most likely rejected you because you failed to get that investor excited. Which 9 times out of 10 was because of HOW you tell your story about yourself as a founder and opportunity; not the traction you have or will have.

When trying to improve your chances next time around you see them you ask yourself and show: 

1. Why you are the best founder in your industry
2. What makes your team back-able
3. What is your deeper purpose
4. What makes your opportunity better than the rest
5. How you can make an investor sold on the future you are trying to create
6. Be able to create emotional connections with investors around your opportunity