Last week we discussed how no matter how intriguing your startup is to an investor, they may still decline to get involved or look further at your company simply because it’s not a fit for them. While it is important to understand that different investors have different needs and motivations, it is equally important for both parties to know how to correctly take the next step and handle the rejection in the right way.

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Foundry Group investor Brad Feld recently wrote an article for Entrepreneur Magazine in which he explains that when he turns down an email pitch, the worst thing the would be entrepreneur can do is ask for a referral. The interesting thing to note here is that Feld actually wrote about this very same topic on his blog back in 2007, so obviously, it’s still an issue he is seeing three years on.

“In networking seminars, classes and sales conferences around the world, people are told some version of ‘if you get rejected by someone, ask them for a referral’,” writes Feld. “This has never worked for me when dating. (After being rejected, I don’t recall saying, ‘I know you aren’t interested in me, but do you have any friends that are?’) I’ve never really understood why people think this works in a business context.”

As Feld articulates in his posts on the matter, the venture capital community is a close-knit group that places a high amount of trust in one another; by asking an investor to refer you to another VC, you are effectively asking them to endorse you. “Good VCs are careful with introductions because they want to make sure both parties view the introduction as valuable,” says Feld.

And just as entrepreneurs need to know how to take rejection, VCs need to know how to dole out that rejection. Feld was originally prompted to write on the subject back in 2007 when Fred Wilson wrote a piece titled, “Saying No.” According to Wilson, honestly is the best practice when it comes to turning down pitches.

“I’ve tried every way to say no and my belief is the truth, no holds barred, is the best approach,” writes Wilson. “If you don’t think the entrepreneur can run the business, tell them that. If you think the market is too small, tell them that. If you think the competition is too tough, tell them that.”

Not all VCs take the time to respond to every single one of the hundreds of pitches they receive on a monthly basis, but for those who do, they should try to inject as much honesty into their reply as possible. For the entrepreneurs on the other side of the table, take your rejection for what it is, and don’t push back for a referral.

Remember to not take rejection personally, the whole “It’s not you, it’s me” mantra is actually true in some investor rejections. And don’t forget to look on the bright side of rejection, as Bijan Sabet suggests. Sabet says that had he not been turned down for his first job application, he may not have found himself where he his today, both professionally with becoming an investor, and personally with meeting his wife.

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Investors get lots of emails. Jason Mendelson of Foundry Group wrote just this morning on how he wishes email were slower so he wouldn’t suffer from what he calls “Email Compulsive Disorder.” That being said, there are ways to write better messages when communicating with investors (or anyone who receives a lot of email daily) that will make the process simpler, quicker and will better your chances of hearing back from them.

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Babak Nivi over at Venture Hacks wrote today on scheduling meetings with investors via email, and how he hopes the the back-and-forth can be simplified. Using dummy emails, Nivi shows that scheduling a meeting with busy, email-laden investors requires more to-the-point conversations; instead of vaguely proposing to meet “sometime next week,” be specific and outline your availability right now and in the near future.

Nivi also suggests using services like Plancast to see if a potential investor will be in your area soon and use that to schedule a meetup. If not, get on the horn. Other ways to streamline this process include keeping your email short, but not colloquial (stay away from Internet abbreviations), and including some good news about your company that provides some context.

These guidelines are great for entrepreneurs looking to communicate with investors, but the same rules can be used in other situations. To be honest, I am probably guilty of not being terribly specific when people want to chat with me on the phone; I let the email chatter go back and forth until a time is agreed on instead of asserting my availability. At the same time, startups and PR agencies could potentially learn some lessons from Nivi’s article when reaching out to media to share their story.

Personally, I only like press releases when they accompany a short personal message. I get a lot of press releases sent to my inbox, but as 37signals‘ Jason Fried and David Heinemeier Hansson said in their new book Rework, press releases are like spam to journalists. We get tons of them every day, so chances are simply sending a press release won’t get you as far as taking a different approach.

The emails I respond to most frequently have a short personal message. I get a few emails each week that not only talk directly to me, but will also mention something else I have written about in the past. It may seem gimmicky, but I’m more likely to read an email from someone who understands the topics I cover.

Sometimes when emails pile up, I may not respond to some messages I may have genuinely been interested in because they got lost in the deluge. Now and then I rediscover and older email when the sender pings me by sending another message under the same conversation. This lets me review their first message and reassess, plus it tells me they actually care enough to send a friendly reminder, and that I’m not just another writer on their email list.

If you know you’re emailing someone whose inbox bulges each day, do them a favor and keep your emails short and to-the-point. When scheduling meetings, be specific, not vague; it helps to keep the volume of emails down, and is less stressful in the long run.

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Foreign startups with their sights set on targeting a U.S. market will be happy to note that as of this morning, Senator John Kerry and Senator Richard Lugar introduced the Startup Visa Act in Washington. In late December we covered the details of the legislation as well as comments from some of the act proponents including YCombinator’s Paul Graham and Foundry Group’s Brad Feld.

As of today, additional supporters include investors Reid Hoffman, Fred Wilson and Dave McClure. The support has us wondering if there is any real opposition to this act?

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According to the Startup Visa site, the legislation has received the support of over 100 U.S. venture capitalists and angel investors. Supporters believe that the act modifying the existing EB-5 Visa will drive U.S. job creation and will allow foreign entrepreneurs to secure visas in the case where they’ve already established investment from a sponsoring US investor. Investment levels are $250,000 in funding from a venture capital firm or $100,000 secured from an angel. The startup must also have plans to create five new jobs every two years, raise at least $1 million dollars every two years, or generate at least $1 million dollars in revenue.

In other words, within a two year time frame, a startup entrepreneur needs to either scale up the operation and staff it, prove the product to the point of raising Series A, or generate substantial profit. Nevertheless, there has been some opposition as a few ask the question, “Why should we let those foreigners gobble up our resources?”

As a foreigner I’m obviously not completely impartial in covering this story; however, some of the arguments against this act seem akin to those used against immigration in general. In this case it appears that the U.S. is purposely welcoming those who’ve been vouched for by American investors, put on a strict product timeline and given a mandate to hire Americans and pay American taxes. Apart from U.S.-based xenophobia am I missing the point of the opposition here? Is there a valid justification as to why this isn’t a good piece of legislation for the U.S. or startup world? Let us know your thoughts in the comments below.

Photo Credit: Startupvisa

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Last week we brought you our curated and organic List of Legal Resources For Startups and Entrepreneurs which includes blogs, online legal tools, articles and tips from venture capitalists. Just recently, Jill Hubbard Bowman’s brand new blog IP Law For Startups, an excellent new source for startups, was added to the list of blogs.

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Bowman’s knowledge of intellectual property law and startups comes from her 8 years of experience at both Silicon Valley-based firm Wilson Sonsini Goodrich & Rosati, and IP firm Brinks Hofer Gilson & Lione in Chicago. She resides now in Austin, Texas, one of the nation’s top booming startup cities, where she currently owns her own law practice.

While other blogs focus on general legal tips, Bowman’s new blog will be a deep dive into the nitty gritty of intellectual property law – a subject Bowman says is one of the most dangerous for startups.

“If your most valuable assets are based on intellectual capital – like most software and technology companies -mapping the IP law landscape is critical for your success,” writes Bowman on her blog.

Jason Mendelson, Foundry Group co-founder and a former college classmate of Bowman’s, says that Bowman promises to spill the beans on some of the worst IP disasters, as well as “expose how some big firms are ripping off their clients.” Keep an eye out for some interesting posts and for now, read Bowman’s debut post on Ten Great Reasons to Learn about IP Law, or for a crash course, download her free 28-page Ebook of frequently asked IP law questions.

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It may soon be easier for foreign startup entrepreneurs to set up shop in the United States thanks to immigration reform which would create a specialized startup visa program.

The proposed program would make more visas available to entrepreneurs who have at least $250,000 in funding from a U.S.-based venture capital firm, or $100,000 in angel funding. The startup must also have plans to either create five new jobs every two years, raise at least $1 million every two years, or generate at least $1 million in revenue.

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The current system grants 10,000 visas each year primarily to investors that have financed over $1 million with plans to create at least 10 full-time positions. It also allows lower benchmarks for investors in less wealthy countries.

However, the new requirements – which are part of a bill proposed by Colorado Congressman Jared Polis (above) – would fall far beneath the current benchmarks, making it easier for smaller companies and those from underprivileged countries to create jobs in America.

The idea is the brainchild of programmer, essayist and Y Combinator partner Paul Graham who first wrote of what he called “the founder visa” in April of 2009.

In some cases, inspired entrepreneurs enter the U.S., but after their ideas flourish and their visas run out they are in danger of being forced to go home to start their businesses. Investor, entrepreneur and co-founder of Foundry Group, Brad Feld experienced this first-hand at the TechStars program in Boulder, Colorado this summer as two of the ten groups had foreign founders.

“Over the summer we struggled to figure out ways to get them Visas – all of the proposed approaches were expensive, risky, and tiresome,” Feld says. “Both companies are still trying, but each are now seriously considering returning to their home countries to build their businesses.”

Along with other entrepreneurs, start-up advisors and venture capital investors, Feld has co-founded StartupVisa.com, a homepage Feld says has been a resource for the movement inspired by Paul Graham’s vision. “In the next few months, we’ll be expanding it aggressively to incorporate grass roots support and feedback,” he told ReadWriteWeb.

One of StartupVisa’s contributors, Manu Kumar, helps spread the word about visa reform by recounting his own struggles. “There were multiple points at which I came very close to having to leave the United States because of the visa issues,” says Kumar.

As the country attempts to pull itself out of one of the largest recessions in history, it only seems logical to make it as easy as possible for foreign entrepreneurs to enter the country and create jobs for Americans.

“I think this would have such a visible effect on the economy that it would make the legislator who introduced the bill famous,” says Graham. “The only way to know for sure would be to try it, and that would cost practically nothing.

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