Rejection, with Feedback, Changes Everything
Updated: Jun 15, 2021
Sabari Raja’s parents were coconut farmers in southern India. Last year, she raised $5 million in a Series A to continue to grow Nepris, an ed-tech platform with 50 employees that can reach classrooms globally. Recently, the TechNest community heard her story about investor rejections, including the Cowtown Angels in 2014 … until one naysayer turned to gold. This edited version focuses on handling feedback as you build and grow your company.
Sabari Raja, CEO and Co-Founder of Nepris Inc.
We were going into pitches with rose-colored glasses, thinking I'm going to just present some MVP product and some nice pitch deck and I'm going to pitch to investors and raise money and blah blah blah…
None of that. It doesn't / didn’t work that way and I actually did not come with a lot of investor relationships.
(Eventually) I did reach out to a couple of investors in the Bay Area and I flew there and pitched. The feedback I got was, you know, we love you and your passion and your enthusiasm. We're not completely sold on the scalability of what you're trying to do.
One of those investors I continued to stay in touch with … Jennifer. She was generous and giving of her time and she advised me and said you're not the first one: You know, 80% of companies that start end up in this place and so don't beat yourself down. You have to think about what are the lessons learned and you're going to attempt this again. How are you going to do it differently? She was almost like my free therapist and that helped me sort of build the relationship with her, and that fund is now one of the largest funds in the ed-tech industry.
They were at that time a seed fund. I applied all of those lessons learned from her and went back to them at the end of 2013 or early 2014 with an awesome product and a founding team with complementary skills. (A result from) the feedback she gave me; you know, a scalable product that we can say, ok, we can do this and build it to a certain point without raising a lot of money.
I was able to take it back to her. I had kept in touch with her throughout the process. Her fund was our very first Institutional Investor in the first seed round. It was kind of the Holy Grail, you know, like all kinds of doors opened from there. So that was instrumental for us.
Dealing with investor feedback
Jennifer became an investor in us pre-revenue, but that didn't happen overnight. I later asked her: I did not do very well with my first (presentation), why would you invest in us? She said I really like the fact that you took the time to take my feedback and you went back and built those things and came back to me and said, I did all of these things, can you take a look now?
Jennifer said they give a lot of importance before investing to the founders. You may be the best in your industry, but if you're not willing to take feedback and not willing to listen and apply, they don't want to work with founders like that. She said she really noticed that and appreciated the fact that I did that and that's why we are here.
There's a fine line. You don't want to take every feedback because you don't want to get too distracted.
I'm in the Austin area. So yeah, a lot of the feedback like I love your platform, but could you actually change it and make it work for corporate training. As a founder, when a big VC is looking at you and saying I love your platform and if you can only make a slight change and make this work for corporate training … getting dollars from corporate is much more attractive to an investor than trying to get dollars from the public school district. At that point, we had to learn to say no because me and (co-founder) Binu Thayamkery always would come back and say, hey, should we be considering this and we'd spend time discussing it.
That is a big pitfall many founders fall into and we had to hold ourselves back and be focused on a proven product and market fit at that stage of the company. We cannot go into corporate training. We cannot go and launch internationally. These were common things. One time it was ‘hey, you guys are Indians, can you launch in India? That's like billions of dollars.’
I'm like, great. I've heard all kinds of crazy stuff. There’s always that shiny object. Yeah, it would be great if we can launch in India, and we will when we're finally ready, but in the early stage, you can’t be moving toward every shiny object.
You want to take feedback. But you also want to analyze whether it makes sense for you and not blindly act on all the feedback that everybody throws at you.
I’m a strong believer in always getting customer feedback. Even as we are growing, we are trying to keep that voice of customer survey as part of the process. If you're afraid to take customer feedback and you stop listening to the customer, then you're not building a product to meet their needs.
There's a tactful way of asking for customer feedback. With our top 5-to-6 customers, every year we have a half-day strategic discussion. We sit down and say what has worked, what did not, and we take notes. We clearly communicate that this is not going to happen right away, but we're going to put it on the road map and we'll come back to you. The relationships with those customers are much stronger because they feel like we're in this together.
Feedback that changed our scope
If I had to do this all over again, I would hire a really good sales leader much earlier in the process. I feel like we would be at least two years ahead of where we are today. Many tech founders put too much emphasis on the product and the technology and not so much on the sales. We just think that organically somehow it's going to happen.
For the Series A, we had to show repeatable sales and there's a lot of metrics that Series A investors look for. The biggest feedback, the most valuable feedback I got, which really sort of lit a fire under my chair, was these two investors that I have always kept in touch with.
I met them in Denver at an event and I said, hey, can you sit down with me and I'm going to pitch to you. One is a veteran edtech entrepreneur who started and exited companies many times and has a strong edtech sales background. So he asked me: Do you have all of your SaaS metrics? You know, like what’s your average deal size? What's the age of opportunity? What's your customer acquisition cost? You know, what's your customer’s lifetime value? I couldn't answer any of those questions. It was embarrassing!
It wasn't top of mind. I wasn't running the business to scale looking at sales metrics and using data to drive and build a scalable organization. So that was the biggest feedback. Both investors said you need to really think about how you're building a sales organization. It was a very depressing day, but I got it.
One of those investors, who is now a board member, introduced me to somebody who's whose entire career has been about helping small companies build and scale their sales organization and turn it into a data-driven sales organization. Two years later, we were able to raise the Series A because I was able to answer every sales question. What's the age of opportunity? What's your average deal size? Our average deal size had increased like 8X at that point.