In this week's video I go through exactly why we turn down the other 99%, the five reasons we say no, and the one thing that gets a company a second look months later. If you're raising, or deciding where to put your own money, watch this before your next meeting.
A no from us almost never means the company is bad. Most founders assume it does, and they walk away reading a rejection as a verdict on the business. It usually isn't.
There are five reasons we pass, and only one of them is about the company falling short. The other four are about fit and timing, and both of those move.
Take venture scale. Plenty of genuinely good businesses aren't built for the outsized outcome a fund needs. We're looking for the ones that could return the whole fund on their own, so the question we run on everything is how big can this get, and what would it take to get there. A brilliant company we can't see returning the fund is still a no for us, and that says nothing about whether it's a good business to build or to buy.
Then there's timing, which is the one most founders misread. Sometimes we get conviction on eight or nine of the ten things we need, and the gap is just that the company is a little early, still proving out retention or growth. We don't forget those. We track them, and we go back when they're further along. We did exactly that this week, re-contacting a list of companies we'd flagged months ago to revisit.
That's the part worth sitting with if you're raising. A no from a serious investor is often a not yet, and how you handle it decides whether you get the second conversation.
The other three reasons we pass, and the one that's hardest for founders to hear, I go through in this week's video.
What this means for you
If you're backing companies, separate the reasons when you pass on something. Only one is "this isn't good enough." The rest are about fit and context, and context changes. Keep a list of the companies you liked but weren't ready for and go back to them. Some
of the best deals could be ones you passed on the first time and caught at the right moment the second.
The full framework we run every deal through, all five reasons, is what I walk through in this week's video.
Warmly,
Rupa
P.s. When you're ready, here are 3 ways I can help:
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