Too much argument and occasional abuse makes responding to pitches perilous

Hanging out with early-stage founders in the middle of a raise, it’s hard to miss the frequent bemoaning of a lack of any response from many of the VCs they’ve pitched to.

Founders sent in a pitch deck or filled out an online application to a hundred venture funds, and…crickets. The best they get is the occasional form letter — sorry not a fit for us.

With VCs and angel groups spending so much effort telling everyone how founder friendly they are, how they encourage innovation, how they’re the critical glue in the startup ecosystem, the lack of any response is disappointing. It’s discouraging. Beyond frustrating.

Why can’t they reply with even a single line that says, “We require a minimum $1M ARR.” Or, “We only invest in what’s hot at the moment (AI) and your [gaming/proptech/legaltech/CPG/social media] sector is off our radar scope.”

The reason you won’t get a useful response from most VCs is a combination of obvious and not-so-obvious reasons.

Responding Takes Time

Let’s start with a critical statistic. VCs and angel groups invest in less than 2% of the startups that apply for funding. That means 98% of the applications end up in the bit bucket.

Around 20% of applicants are invited to give a pitch. About a quarter of those get to diligence. Half the startups that make it to diligence receive an investment.

That means 80% of applications are rejected out of hand. They’re spam clogging up the in-box. After reviewing thousands of decks, we can tell within 10 seconds whether an application is in the 20% group worth considering or the 80% that are immediate passes.

With hundreds of applications to review at a time where the vast majority are not serious contenders, we just hit delete delete delete and trudge through the pile until we find one that catches our eye. Sorry, that’s life.

Despite the months of work agonizing over every word in your pitch, nobody read past the one sentence summary you put on the application. Listing a reason for the rejection would require reviewing the entire application.

Replying to everyone with something more than, “sorry, pass” would multiply the amount of time it takes to weed through the pile. So most VCs don’t bother responding.

Stated investment criteria are not the real criteria

Let’s say the sweet spot for a fund is $5M checks at Series A in startups that have reached $1M ARR. Your startup at still at $20K ARR. You’re clearly too early for this fund. So why not just send a template response with a checkbox marked for “has not reached $1M ARR”?

That would require that funds have narrow criteria that they never deviate from. And that’s not how funds work.

When the former VP of AI at Google is pitching his new startup, that same VC that rarely invests without $1M in ARR may decide to invest in a startup that’s not only pre-revenue, but in this case nothing but an idea.

VCs are opportunistic. They jump into any deal they think is attractive to them or their investors. So criteria are kept vague. They want to avoid declaring they only invest in startups with $1M ARR, then be called out as liars and hypocrites when they invest in that hot pre-revenue AI deal.

So instead of saying they invest $5M at Series A, they’ll list their criteria as investing $500K to $20M in pre-seed through Series C to cover every possibility. They might say they don’t invest in hardware or medical equipment since that requires special expertise, but they won’t say they don’t invest in gaming or legaltech or proptech even though it’s extremely unlikely because, well…for the right opportunity, they might.

Still, unless you’re the VP of AI products at Microsoft and are buddies with the fund’s partners, your pitch for a pre-revenue startup won’t get past the intern triaging the pile.

When considering which investors to reach out to, don’t just look at their official criteria which is vague and meaningless. Look at the actual investments they make: sector, stage, revenues, raise/valuation, check size, lead/follower, geography. If you don’t fit with the other firms in their portfolio, don’t expect they’ll do anything other than delete your application within 10 seconds.

No is not really no.

You’d think that if a VC wasn’t interested in your startup, they could say so. But what if next month your revenues 10x? Or Andreessen Horowitz decides to invest and now you’re the hottest play in town. Or an early-stage gaming startup got acquired by EA for $2B and now every VC is in a panic to get a gaming-tech company into their portfolio. Good thing they didn’t say no to your gaming startup!

The startup world changes quickly and it’s easy to go from not to hot in the blink of a tweet. Unless it’s an absolute no way, it’s better to leave the rejects on hold instead of telling them to go away. Just in case. No reason to burn bridges.

The biggest reason: arguments and abuse from rejected founders

As a startup mentor as much as an angel investor, I try to provide guidance to founders. If they’re too early for our angel group, I want them to know so they don’t waste time on the 99% of other angel groups that will also find them too early.

About half the time, the founders will reply with a polite thank you. A few will give more fulsome thanks for the useful feedback. Some will even update their fundraising strategy to something more likely to succeed. Wonderful. Mission accomplished. This is what I live for.

Another 40% will argue with me. They’ll tell me I’ve missed important points in their pitch. They’ll reiterate the size of the opportunity. They’ll ask if they can pitch again (and again) with a revised deck. They’ll message me with updates every month to prove I’m wrong. It’s an annoying time drain. You’ve had your shot and I’ve provided feedback for why I wasn’t interested; now please move on.

But it’s the last 10% that are the hidden problem. They go beyond telling me I’m wrong to calling me stupid a dozen different ways. Or worse.

I’ve been called a racist multiple times for not investing in their startups. I’ve been accused of refusing to invest in female-led startups. (I do, just not their theirs.) I’ve been told I’m a privileged jerk by people who know nothing about me or my unprivileged background. I’ve been told I’m a bad person, I’m corrupt, I have no moral compass. I’ve even been punched at a conference (fortunately not very hard.) All because I turned down investing in a bad startup.

The insults and abuse are only from a small subset of the founders I interact with, but they take a toll on my willingness to give honest feedback to people I don’t know.

For VCs, the situation is worse. Founders go to social media to complain. A few unfortunate posts by frustrated founders can hurt the firm’s reputation, especially for a small fund that struggles to get into hot deals.

So for investors, it’s easier and safer just to say “sorry, not a fit.” Or not respond at all. If the fund is interested in learning more, they’ll let you know. If not interested, that’s not their problem.

Their job is not to help the thousands of random founders who submit applications to their funds — it’s to make money for their investors. They’re looking for the 2% of standouts to invest in, not to mentor the 98% they’re not interested in. There’s no upside in providing feedback and significant risk, so few do it.

I know it’s frustrating. I wish it were different. I wish VCs were clearer about their real criteria. I wish VCs and angel groups gave a specific reason for every rejection. I wish founders understood that no matter how annoyed and frustrated they are, no matter how much they disagree, no matter how stupid or unfair they think the investor is, the mature response is to say thank you and move on. Hurling abuse at people trying to help you hurts everyone. But wishes won’t change anything.

My advice is to recruit a strong team of mentors who can provide you the guidance you need about who to pitch your startup to at your stage and how to navigate the fundraising process. In the end, that’s the responsibility of mentors and advisors, not the job of investors.

Katie Deauville is the founder of the teleportation startup, SüprDüpr. She could’ve used some good advice on how to build a startup instead of following Elizabeth Holmes and the Theranos model. Find out what happens in To Kill a Unicorn, the most fun you’ll ever have reading about Silicon Valley.