Earlier this year, I was tasked with leading two treks from my business school to meet with Venture Capitalists – one trip to NYC and one to Silicon Valley. As expected, applications exceeded available slots by several multiples and we had to reject the vast majority of applicants. Because I didn’t have time to write dozens of individual notes, I sent one mass e-mail to those accepted and one to those rejected. My rejection letter was pretty bare – “Sorry we’re not able to take you, we’ll try to run more programs this year in Chicago, etc.” Nearly immediately, negative feedback started rolling in – one person was indignant and convinced they were “more qualified” than others, others told me I was ruining their summer prospects, some were more polite but clearly hurt.
Myself and the rest of the judging team had done the best we could. But I was overwhelmed and started taking their feedback to heart. I felt guilty and began questioning every decision we’d been. And then I got a reality check – “Ezra, you are dealing with some of the smartest kids in the world. Who’ve gone from undergrad to great jobs to one of the premier b-schools in the world. This is one of the first times they’re being told ‘no.'” That was true, being rejected is difficult. But I hadn’t considered their perspective – being told repeatedly that at Chicago Booth, successes were imminent, that they could just join a club and network with business leaders. I had tried to warn people how competitive the process was, but that message hadn’t seemed to stick. I had to say no, but I could’ve done it better, with more positivity, with concrete suggestions – I learned that saying no requires tact and compassion.
If you’ve ever dealt with VCs, you know that time is short and e-mails are shorter. A typical internal e-mail in a VC firm reads something like “I buy value prop X, but doubt they can gain distribution through Y. But let’s bring them in and see if they’ve thought it through.” Short and easy, right? The typical VC rejection letter is even slimmer – “Thanks for coming in last week – a bit early for us right now but keep us updated on traction and the fundraising process and we can circle back in a few months.”
At I2A Fund, I’d like to think we weren’t that bad. But saying no was not our speciality. We were good at saying “not right now,” but that was about it. And then it happened. We got forwarded an e-mail from one of our companies who had been rejected by one of the largest VC firms in the world. A firm, which must have far fewer hours in the day than we do. And yet, their e-mail was three crisp paragraphs. It cited specific metrics, solid research on the state of the market, and answers were well thought out. Stuart and I were blown away. We realized that we had to improve. That founders, who pour their hearts out for an hour over the course of a pitch, deserve real feedback – not a silent wall or a terse single line e-mail after three weeks.
On our Silicon Valley trek, a partner at Kleiner Perkins also discussed his goal of giving more actionable feedback. The issue he noted was one of expectation – specifically that if you tell a company that you can’t move forward because their widget isn’t yellow enough, and they come back 9 months later and it’s bright yellow, the expectation is that you’ll fund them. So how do you solve that dilemma?
Yesterday, we met with a company, where because of some existing relationships, we were able to a more informal conversation towards the end. We discussed the lack of actionable feedback in rejection letters and they made a suggestion which we might well try. They suggested: if you’re not excited by our business, why not just say so instead of running us around in circles? As an early stage VC shop, we meet with dozens of companies a month and fund between 8-10 per year. That means we need to literally be in love with the team and idea to move forward. So why not write “Just following up to let you know that we really enjoyed the meeting and think you’ve identified a real pain point. We discussed the opportunity and realized that we’re simply not passionate about the space right now, but think you’re doing X, Y, and Z really well, and that you’ll have a lot of success fundraising if you can answer questions related to A, B & C. Let us know if we can help make any intros and look forward to seeing you around.” Would that be offensive? Is it socially acceptable to reject opportunities because we’re simply not excited?
The larger point of the post is to recognize that at I2A we’re committed to showing that we heard the pitch and gave it some real thought. Over the past month, I’ve often spent more time writing feedback notes than the pitch itself. Companies need to come in with the expectation that we reject 99% of deals we see. But we need to come in with enough compassion to realize how deeply personal and intimate sharing a company can be. Since I started writing longer, more insightful feedback notes, I’m yet to be flamed. I’m sure it will happen eventually, but do hope that people recognize that we’re trying to communicate with people on their wavelength and be considerate of their feelings.