How Should VCs Say No, When It’s The Team?

One of the things I continue to struggle with as a VC is the unfortunate fact that I am in the business of saying “no” all the time.

Saying “no” in the context of how you invest your time is one thing – fellow VC blogger Brad Feld did a good blog post on this topic in the context of time management a few weeks ago as did Y-Combinator’s Paul Graham. But I really struggle with saying “no” to entrepreneurs. Entrepreneurs pour their hearts, souls and dreams into their start-up ventures and to summarily dismiss them remains the hardest thing about the job. One of my entrepreneur buddies asks me whenever I see him: “So – did you crush any entrepreneurs’ dreams today?” Very funny. Ha ha.

One of the reasons for this dynamic is that VCs are in the business of trying to see everything (i.e., learn about and meet with all the best deals out there) but do nearly nothing (i.e., invest in only one or two companies a year). My blog post on this topic a year ago was a bit tongue in cheek (VCs and Deal Flow), but only a bit.

My dilemma becomes more acute when I try to explain why I am saying “no”. In particular, how do you say no when the reason for turning down the investment opportunity is the team? It’s easier to say no when you have concerns about the market, the business model or the price. The entrepreneurial team is great, you would enjoy working with them, you think they are money-makers, but there’s something in the general model that prevents you from pulling the trigger. Those are the easy ones.

The hard ones are when you are saying no because of the team. Successful start-ups typically follow Thomas Edison’s genius formula: 10% inspiration (in start-up land, the vision or idea), 90% perspiration (in start-up land, the execution). Whether you like the idea or not is irrelevant if you don’t believe the team has the wherewithal to execute it successfully. Sure, a team can evolve over time and new leaders can be brought in, but very few VCs invest behind teams they don’t believe in.

One curmudgeonly VC I know used to say to entrepreneurs: “I don’t think is an opportunity that suits you.” At Flybridge Capital, we try our best to be direct and honest in providing feedback to entrepreneurs to help them with their ventures and perhaps we should have the courage to give it to people between the eyes. I’m just not sure this blunt feedback would pass the decency and respectfulness test. After all, who am I to project such an unfair judgment based on a 45-60 minute meeting? VCs need to “Blink” and make snap judgements after those 45-60 minutes in order to filter and prioritize how they spend their time, but why be mean about it? So in the end, I often settle for a polite “it’s just not a fit for us”. Is that the right approach? Let me know what you think. What’s the meanest turn down you’ve ever received from a VC?

Jeff is a partner with Boston-based VC firm Flybridge Capital Partners. Read his past peHUB posts, or follow him on Twitter at