This article was published on October 9, 2015

17 ways to say no: Real responses from real VCs on why they didn’t invest

17 ways to say no: Real responses from real VCs on why they didn’t invest
Ben Woods
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Ben Woods

Europe Editor

Ben is a technology journalist with a specialism in mobile devices and a geeky love of mobile spectrum issues. Ben used to be a professional Ben is a technology journalist with a specialism in mobile devices and a geeky love of mobile spectrum issues. Ben used to be a professional online poker player. You can contact him via Twitter or on Google+.

Starting your first company (or your third) is a daunting and exciting prospect, but even if you manage to ultimately find some success it probably wasn’t at the first attempt.

On that road is a whole lot of disappointments, so we thought it might be useful to bring you some real examples of rejection responses received by founders looking for investment from VCs.

For obvious reasons, the VCs remain anonymous and the founders unattributed. A few of the companies include Centrallo,, Boundless, StreetHub, Courses.Ninja, plus some others that would prefer to remain totally uncredited.

The out and out rejection

Sometimes you’re just going to get a flat-out ‘no,’ even though all signs might have looked good right up until that point.

  • “I think the question for us is ‘is it a network or a utility’ it feels like a utility for me which is not what we invest in.”
  • “As discussed, we might hang off on this particular round as you get through a few more revs of the product and run some early acquisition experiments. Very exciting stuff – just would love to see how things trend for a bit.”
  • “At the moment, we’re going to pass on the opportunity but we’d love to continue to monitor [redacted] and stay in touch to see how it further develops.”
  • “I had a chance to play with the app and show/discuss it with the rest of the team, and we have decided to respectfully pass on an investment at this point.”
  • “We find the market and your model extremely interesting, so were keen to dig in deeper. However to proceed we would have liked to see more traction[redacted] over the course of the last year as well as more monthly transactions.”
  • “We talk about ‘Blue Ocean Markets’ and ‘Red Ocean Markets’ and this feels very Red Ocean to me.”
  • “It seems like you’re approaching this in a very thoughtful way, and it would be great to be kept up to date with significant updates from your end — please feel free to reach out directly.”
  • “Definitely an interesting opportunity. Unfortunately, I think we are going to pass on the round given the competition for mindshare with a [redacted] app. Look forward to testing it out and watching you execute.”


‘We love you, but…’

A lot of the time that interest is genuine, but it still doesn’t result in the ‘yes’ that founders want to hear.

  • We had a few very ‘squishy’ late stage no’s, where the answer was like “we love you, the team, the market, the idea, but can’t quite get around to yes,” that was the least helpful, and we always wondered if there was something we were missing or they weren’t telling us.
  • “In short, your clients are thrilled with your offering (thanks for letting us contact them), we love the immense growth you guys are driving, and we want to be a part of the company. All that being said, since you are still unwilling to offer us a board seat in return for our investment, we are required to pass on this opportunity.”
  • “We had some more time to explore this today and we love the progress, but ultimately decided to sit this round out. I appreciate all the follow up here and love what you guys are doing, but it’s simply a bit too early.”
  • “We’ve had a chance to digest and discuss. Unfortunately we don’t yet see enough to get us over the (high) bar of pursuing an investment. [Redacted] are all topics which fascinate us. And the product catalogue you are building resonates in some ways with [redacted]. But we don’t yet see enough in proof points, ability to scale and ability to become a very large business.”
  • “Your idea is amazing and [redacted] needs it. Come back in two to three months time.”


Investors aren’t always right – and good ones know it

OK, you need their cash and connections, and they need your potential for growth and return on investment. However, that doesn’t mean they’re always right – and sometimes, there’s room for regrets down the road.

  • An early/A stage investor passed at the Seed round because they didn’t believe the market was big enough then they came back to me after we closed our A round upset that we didn’t pitch them for the A. Internally we joked that “well, the market didn’t get bigger,” but we gave them a generic response.
  • A few of the pretty intelligent investors gave us credible reasons as to the core challenges of the business, which weren’t wrong per-se (as all businesses will have challenges) but the disagreement came down to the magnitude of the challenge.”
  • At the early stage there was an arrogant suggestion that we should raise much less and changing our entire plan. We disagreed as it was critical to make it to key openings in a given year. That same investor said we would get crushed by a totally non-competitive player [redacted], that eventually shut down.
  • Read valuation 101

What does that all mean?

Ultimately, what we hear a lot from founders is that many investors often fail to grasp what their product really is, and therefore its potential.

When you hear “We’re going to pass on the opportunity but we’d love to continue to monitor and stay in touch to see how it further develops,” that sometimes means “We don’t really get it, but if you get traction or someone smarter than us invests we don’t want to miss the boat.”

That’s not always the case, of course, but it’s one reason that the way in which investors say things can have an effect on its real meaning.

The confusing part is that you’re going to want to continue discussions with investors, even if you feel like they might not fully ‘get it’ yet.

One of our anonymous contributors says:

“Many VCs are actually using a pretty rigorous scheme in order to decide if they are interested in startups. For example, one of the key metrics they look at is MRR [Monthly Recurring Revenue] or Active Users. If you do not fall inside the scheme, it’s hard to convince them to invest, especially if they’re not really interested in the area in which you’re operating.

What you want is to get investors who have already invested in your area, but sometimes an investor outside of your business area will express an interest in your startup. Of course you don’t say no and start the investing process, but then he uses the scheme above to classify the investment… in this case, the common reason for not investing becomes the fact that they do not understand your business very well.”

If in doubt, remember that you’re not really in it alone – there are loads of other founders and entrepreneurs talking to VCs all the time, so you can always get a second opinion.

Featured image credit: Shutterstock 

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