Then the company might have corrected that flaw, moved the CEO to Chairman where he belonged, and worked with the investor to find an excellent leader to fill the CEO position. Then the investor might have closed the deal and history would have been different. “No” at the point of investment would have generated a healthy result for that company.
When a company is seeking investment capital, sometimes, the best answer that they can receive from an investor is no. This is because investment in a company that is not ready for investment is not good for anybody. A company that is not ready but receives investment capital anyway cannot efficiently allocate those resources. The company’s time and equity will then be gone and cannot be reclaimed. Then, the founders and investors will have to find new ways to finance the company all over again, just to have another chance to
to begin again. Usually, the only way to accomplish this is by diluting the ownership of a company in order to find more investment capital. But, sourcing that new round of investment capital is then more difficult. The founder will have lost time and everyone will own a smaller share of future success. The alternative is to fold up the company and walk away. Many wonderful business opportunities die this way.
When experienced investors say no, they will tell you why they cannot invest in your company. If you are an entrepreneur, “no” can be an important milestone on your way to making your company successful. Why? Because when experienced
"A company that is not ready but receives investment capital anyway cannot efficiently allocate those resources. The company's time and equity will then be gone and cannot be reclaimed"