How To Say NO To A Startup

by Kera DeMars

Getting rejected sucks.

This is true for the dating world and the fundraising world.

But in both circumstances there is a right way to do it, and a really awful way to do it.

Today's topic: how to reject a founder without burning bridges or ruining your reputation.


Being a founder is hard.

Especially when you're trying to raise a round.

You have to ask strangers for money. Many, many strangers.

You have to put yourself and your business under a microscope, and be willing to be rejected dozens or even hundreds of times.

It's hard not to take that rejection personally, especially when investors don't just reject you... they ghost you.

At a minimum, founders deserve the respect of getting a response from the investors they pitch.

But how to do it in a way that doesn't destroy the relationship or your reputation?


Rejecting a founder you didn't meet

It's not uncommon for investors to review a pitch deck and decide not to invest.

Even if you don't meet the founder or take a call with them, it's still appropriate to send them a reply.

A good way to handle these rejections is to create a couple of email templates you can quickly shoot off to the founder.

For example, you could base your rejection on the fact that the business doesn't fit into your investment thesis.

"Thank you for sharing this with me! Unfortunately I'm going to be a pass because this business doesn't fit my sweet spot. I tend to invest in B2B / fintech / etc. Really appreciate you reaching out, and best of luck with the business!"

Or, you could explain that you don't have the bandwidth to bring on another portfolio company right now.

"Thank you for thinking of me! Unfortunately I don't have the bandwidth for this right now, so I'm going to have to be a pass. Good luck with your business!"

Getting a response like this will be less of a blow for the founder than being ignored.


Rejecting a founder you did meet

Once you've taken the time to meet with a founder – whether in-person or over the phone – it's appropriate to send a customized response.

It doesn't have to be long, but your response could include your decision not to invest, some feedback about why you came to that decision, and words of support.

For example...

"Thank you for meeting with me last week! I'm impressed with your traction / hustle / etc. In thinking this over, I just can't get conviction around valuation / growth strategy / etc, so I won't be moving forward with an investment. I really enjoyed meeting with you and I hope you knock it out of the park! Thank you again for taking the time to chat with me."

What to do if the founder responds

Now, it's possible that a founder will respond to your rejection email.

Depending on the response, there are a few ways to handle this.

If a founder responds but doesn't include a call to action, there is no need to reply back.

For example, if they say, "Actually, I think the growth strategy makes a ton of sense because..." but doesn't ask anything of you... just let it go.

No need to continue engaging.

But they might say, "Actually, I think the growth strategy makes a ton of sense because of xyz reasons. Can we hop on another call to discuss?" 

If you don't want to continue engaging, you can say, "Unfortunately, I just don't have conviction. But thank you!"

That should end the conversation.

Most founders are incredibly gracious about rejections – heck, it's better to be rejected than ghosted. 

But occasionally you run into a founder who is determined to keep the conversation going, regardless of how many times you say no.

If you have been clear in saying no to an investment, and they continue to email you, you should feel free to stop responding altogether.

Oh, and in case you're wondering... all these rules apply to dating, too.

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