Saying no
Saying “no” is hard.
Plenty of people in my industry have written about why VCs say no. It’s a big part of the VC life. We can’t possibly fund every company.
Typically, the best practice is to say no with reasoning: that way, a startup at least leaves the interaction having learned something. Maybe they left the meetings with a better sense of what venture investors look for. Maybe they left with a new perspective on a fundamental problem they’re facing. Maybe they learned that a VC can be in a period between funds when investment is just not possible. In any case, a primary function of a VC is to be as helpful to the entrepreneur as possible. If it’s a no, then saying no quickly and reasonably is best.
The worst VCs waste time and don’t really say no. This way, they leave the door open just in case the startup starts doing well. They’ll push meetings further and further away without making any internal progress. Or, worse, they keep bringing you into meetings that are an exercise for the evil VC to get competitive information. Admittedly, when schedules explode and the workload gets peaky, it’s easy to fall into the practice of saying no without reasoning or not replying to emails.
In most cases, there are substantive ways that a startup has not met our bar. I won’t go into these reasons, but there are a number of resources and articles on the interwebs that can help one figure out why a VC might say no.
Issues with founder fit are the hardest no’s. In early-stage investing, founder fit is one of, if not the most critical piece of criteria to satisfy. Investors have to believe that entrepreneurs are intelligent, flexible, determined, and all of the other good qualities that (slightly) de-risk an investment.
The VC industry is business, but founder fit makes it personal. How do you flat-out reject someone to their face? It’s why so many millennials break up via text — being completely honest with someone is hard. I haven’t gotten good at this yet. I sometimes end up dodging for a bit before I have a good answer.
I’m seeing that complete honesty is best for everyone. Sure, there are ways to decrease the impact of the rejection. There is language to use to lessen the probability of the entrepreneur taking it personally. That doesn’t make it any easier. Especially for me, as someone with little track record, no operational history, and not many years my belt: an entrepreneur doesn’t really want to get a rejection from me. Even giving advice can be hard. Although I have weight in decisions, I’m not a partner yet.
Saying no is hard.
