Why Don’t Venture Capitalists Tell You Why They Won’t Invest?

Today, I was asked through AskTheVC the following question:

‘”Why don’t VCs tell you the reason why they don’t invest? Any feedback would be useful. It’s just plain rude.”

I figured that this is really a personal question, so I thought that I’d post on my personal blog, as I certainly can’t speak (or even guess) the response for the entire VC industry.

I say “no” all the time.  (My partner Brad talks about “saying no” in a great post here).  In fact, I say no to over 90% of what I’m invited to invest in immediately.  On top of this, I get several to many emails a day regarding investment opportunities. 

Time is a resource that I don’t have nearly enough of.  Therefore, if your company is not doing something that we’d invest in, I feel the best use of my time is to send a quick email saying that it’s not right for our fund.  For me to give feedback on your idea, business model, team, etc. seems arrogant given that I haven’t spent any real time evaluating your company.  I’m not trying to be rude, rather, I don’t feel qualified to give you opinions on something that I’ve only taken a short gander at.  Unfortunately time constraints don’t allow me to deeply look at companies that aren’t right for our fund. 

For the other 10% of things that I spend time on, I do try to give some meaningful feedback, but sometimes it’s easier than other times.  Sometimes, there are one or two things that I have strong opinions about which I’m happy to share.  Sometimes, there are things that I’m seeing with our own portfolio companies that are relevant to your company that I may want or not want to share with you.

Lastly, one thing that has always been tough for me to deal with is when the main issue with the company is the entrepreneur(s) themselves.  It’s not easy for me to say “I wouldn’t invest in you” and I try to stay away from that, because people change and improve over time.  But there are times when the opportunity doesn’t involve an entrepreneur that excites me and thus my feedback, generally, is lighter.

I’m sure there are plenty of VCs out there that are rude out there.  I try not to be and hopefully succeed more often than not.