In 2008, Airbnb was struggling. Company was on the verge of collapse. Founders had maxed out their credit cards. Instead of hiding the bad news, they reached out to their investors, not just with updates but with creative solutions. One such move was selling collectible “Obama O’s” and “Cap’n McCain” cereal boxes during the U.S. elections, raising $30K to keep the company afloat. Takeaways: Be Transparent – Investors appreciate honesty. If there’s a setback, acknowledge it early. Show a Plan – Even if things aren’t going well, demonstrate a strategy for recovery. Engage Proactively – Keep communication open. Investors don’t like surprises. Demonstrate Resilience – Show them you can adapt and find solutions, not just dwell on problems.

Setbacks with investors can be seen as challenges, but they’re also opportunities in disguise. From my experience, it’s not about bouncing back—it’s about reframing the situation as a catalyst for growth. When I faced unexpected hurdles, instead of just delivering bad news, I pivoted by presenting innovative solutions that aligned with market trends and long-term goals. I engaged investors as partners in the process, leveraging their expertise and networks. At the core, relationships with investors aren’t just transactional—they’re built on trust, vision, and resilience. By approaching setbacks with creativity, transparency, and actionable solutions, challenges become springboards for stronger, more meaningful partnerships.

Most people equate this with sending a bad quarterly update and investors getting antsy to a point at which they start pressuring your company for one of: leadership changes, business pivots, or an untimely exit (but at a favourable multiple). I've written at length about this but, to summarize, help these investors exit through secondaries. But this is 'expected' An example of an unexpected setback is your VC themselves failing to realize drawdowns from their LPs - resulting in a shortfall for your funding round and thereby, a need to resort to Plan B. By no means should you use this as an excuse to diss the investor - instead empathize with their situation - something that will stand you in great stead when raising future rounds.

Facing unexpected setbacks with investors can be tough, but I’ve learned that open communication is key. I make sure to keep investors in the loop, acknowledge the challenges, and highlight the solutions. Building trust through transparency and staying focused on progress strengthens those relationships.

Unexpected investment setbacks occur; just ask Airbnb's Brian Chesky. In 2008, Airbnb struggled to raise funding, receiving numerous rejections. Instead of burning bridges, Chesky kept investors informed of progress. Later, some of the early skeptics became major supporters. What's the lesson? Maintain transparency and persistence. Communicate setbacks honestly, give solutions, and demonstrate resilience. Investors value founders that adapt and execute despite obstacles. Keep relationships warm with regular updates, even after they have passed away.