Getting to No

My wife and I live with a toddler and as a result are becoming more familiar with the concept of “NO” – which, incidentally, I can now assure you can contain anywhere between 1 and 5 syllables, depending on the desired effect and emphasis. It got me thinking about a VC pet peeve of mine which is how shitty a lot of VCs are at turning companies down. I’m not talking about the form e-mail that VCs send out to pass on something that they don’t want to take a look at (we all send out these e-mails, don’t we ?!?) – I’m talking about companies that we spend some amount of time with (say at least one meeting, but often several) and decide not to invest in. I’ve experienced this from the other side of the table with some of our portfolio companies, much to my frustration. I probably go too far on this one, but when I turn a company down I typically like to have either a phone conversation or a face-to-face meeting (depending on how much time I’ve spent with them) and outline exactly why I’m turning them down. I don’t break-up on e-mail or by voice-mail. More importantly, I try to give a real reason, not the VC bullshit reason, why I’m not interested (which is to say that I’m never “not comfortable with the market size” or “don’t invest in early stage deals” for example; and certainly never simply avoid phone calls so I don’t have to have the conversation at all). This has led to a few awkward conversations (telling founders that I didn’t think they were the right CEO for a business for example) and plenty of push-back from entrepreneurs who didn’t agree with my analysis of their opportunity/product/way of going after a market. But I’d rather that than honing my bs skills and coming up with new and creative reasons for not investing in something.

If anyone out there has had particularly amusing experiences with getting turned down by a VC I’d love to hear about them.