I can’t even remember how many times a VC has said no to me, but it’s certainly well into the double digits. But this article by Robbie Allen 15+ Ways a Venture Capitalist Says “No”, captures every type of “no” I heard and many more.
What’s invaluable about the article is not just that he provides a translation from VC-ese to plain English, but Robbie Allen also adds his comments on what this response really means to the founder. If you are out raising money or even plan to, this article is must reading.
And when you are done you can read my post, Getting to No! on how to deal with all the rejection you’ll get as a founder of a startup, not just from VCs but customers as well.
Here’s some excerpts from Robbie’s post, but I highly recommend you read the entire article.
Given the sheer number of rejections that venture capitalists dole out, you’d think they would be better at it. Unfortunately, most are not. VCs are notorious for not saying “no” even though they have no intention of investing. It’s in their interest to keep you on the line as long as possible just in case you become an interesting company they get enamored with later on.
That means it’s easy to misread the signals a VC gives. Below are 15 different types of responses I’ve heard between my own fundraising efforts and companies I’ve advised. They range from being a direct form of “no” to a more insidious and subtle deflection that still means “no”.
VC response: <no response>
Translation: I’m not going to engage in a conversation about how bad of a fit you are for our firm. Maybe I’ll develop a reputation has a hard-to-contact VC that only responds to the top entrepreneurs.
Comment: Perhaps the most common way to say no is not to respond. Instead of being forthcoming about your lack of fit with their firm, it’s easier for them not to respond. And never fear, they are getting your emails! Rarely do they actually go into the person’s SPAM folder even though you convince yourself that’s what has happened. Otherwise they would have responded by now, right?
Not only is it in the VC’s interest to keep you on the line, just in case you become interesting a some point, they also want to try to maintain good relations with all members of the founding team. So they may have no interest in founding VentureX, but if a founder splits off to form another venture that may be exciting to them they want to help insure that founder comes to them for funding. Virtually all VC investments come from their networks, so they want to keep their network reputation as positive as possible, even though the reality is that they will say”no” to over a hundred ventures in a year and “yes” to only two to five at most.