Some Thoughts on VC Rejection Letters — And How They Unintentionally Hurt Brands

A VC recently told one of our portfolio companies he would be passing because the company was “too early.”

I was confused because this was a Series A deal, and the VC firm very squarely makes series A investments. The same VC had also told a couple of other companies in our portfolio raising series A rounds of capital the same thing.

I finally confronted the VC and asked “are you guys only doing growth stage now?” Because in my head I didn’t want to keep sending deals to him if they were all going to be a waste of time.

What had actually happened was that the VC just didn’t like the ideas/business models. Which is completely fine! But by saying “this is too early” that VC is basically saying “we only do series B deals now.”

And in doing so, the VC is now marketing himself as a growth stage VC — and is putting false information into the market. This is probably even worse than if a press article were to come out with incorrect information because it’s coming straight from the VC’s mouth.

I get why he did it — he was trying to be nice, and it’s uncomfortable to say “I think this is a dumb idea” or “I think this idea is too small.”

But it’s probably better to say that than send an incorrect signal to the market. And it’s proof that rejection letters are so important and if done right, are a marketing opportunity.