This post was inspired by a question on Quora — what's the worst part of being a VC?
(See the question on Quora here.)
When I was an entrepreneur everyone always said no to me. Potential investors, potential customers, potential partners, potential employees… Running a startup was just one long stream of no, no, no and further no. A brief, occasional yes would make you jump for joy. At least until a couple more ‘no’s put you back in your place.
Given that experience, I really don’t understand people in venture who complain about having to say no. It is a great privilege to be the person who is able to say no. I realise that, of course, you feel bad for the entrepreneur, but try being the person to whom the no is said… it sucks way more!
But having said that, saying no isn’t a walk in the park, so it might help to do what I do and channel those negative feelings into something positive for the entrepreneur:
Do it quickly
Although I didn’t enjoy the nos of building a company, entrepreneurs always have so many questions ‘out for answer’. At any one point, startup founders are checking for an email, or waiting on a phone-call that might deliver an illusive yes. Even if an entrepreneur receives a no, being able to strike another unanswered question off the list offers a huge amount of clarity. As a VC, be honest with yourself. Are you ever going to be able to say yes to these guys? If not, say no fast.
If a decision needs to take longer due to the complexity of the decision-making process, be honest and explain it all to the entrepreneur. You will get the occasional person who will try to ‘close’ you through the stages, but you can ignore that. For everyone else (the majority), this level of transparency will help them value how far down the pipe you are and, therefore, how close you are to a yes. This is super-valuable for founders. It helps them juggle all of their unanswered questions, and enables them to prioritise.
I’m staggered by the VCs who write two-sentence ‘pass emails’. This is fine if you’re delivering a ‘no’ to someone who has inappropriately cold-emailed you, and they clearly don’t fit your thesis or stage or focus or whatever.
But let’s say you’re saying no to an entrepreneur who’s pitched you in person.
An entrepreneur who has gone through the hell of building a product, starting a company, getting a meeting with you, flying at the back of the plane, staying at a crummy hotel, and waiting outside for an hour in the rain to be on time for the meeting. Then, they had to compress years of blood, sweat and tears into a 60-minute meeting with you.
You know what you should do?
Write them a proper rejection. Explain what you liked, what you didn’t like, what you think they could work on and, if you can, be helpful by making introductions to others who may be able to help.
“I hate having to say no.”
Come on! Despite it being hard to always find the time to do so, I’m trying hard to do all of the above every time. I hope you do too.