Why VCs ghost founders, or reject deals and never speak to the founder again

Getting ghosted is never fun. Especially if you’re a founder seeking capital from investors.

It’s similar to dating. You might be left wondering “Why is this person not getting back to me? Did I do something wrong?” Did the investor hate the product? Did they not care for me personally?” It’s enough to drive anyone crazy.

Ghosting is an undeniable signal of a lack of interest. If a VC wanted to invest, they would definitely respond to your cold call, or get back to you after the pitch.

There are a variety of reasons why a VC might vanish after a founder thought they would agree to a meeting, or worse, after one, according to several VCs who talked to TechCrunch. 

Time

Time is people’s scarcest resource, Mercedes Bent, a partner at Lightspeed Venture Partners wrote in a LinkedIn post on the topic of VC ghosting that went viral. VCs naturally are going to spend more of it on the founders and startups in which they see potential.

“Writing a thoughtful rejection takes effort, and when a pass won’t ‘convert’ [to an investment],  it often gets deprioritized. Not saying this is good,” she wrote in her LinkedIn post.

Bent also notes that the investing environment has shifted over the past decade so that VCs are having to make decisions faster and thus, have less time to get back to prospects.

“VC has ballooned at breakneck speed – more firms, more capital, more pitches,” she wrote. “With more focus on volume and speed, there is little room for the intentionality and personal touch that once defined the industry.”

Such rapid growth has created a churn-and-burn culture where relationships feel increasingly transactional, she added.

Better Tomorrow Ventures co-founder and general partner Sheel Mohnot says things most often slip through the cracks when he’s “super swamped.”  

“This is never about the founder and always about what else I have going on in life — like if we are fundraising, or it’s the week of founder camp, our AGM, Money 2020, etc.,” he told TechCrunch.

Eric Bahn, co-founder and general partner of Hustle Fund, relies on an automated email response to help him manage the influx of inbound deal opportunities he receives in his inbox. He estimates that he receives about 30 inbound pitches per day.

“I have a permanent out of office email message set up that will reply back to every message with instructions on how the founders can engage with our investment team via our website form,” he told TechCrunch. “Our team takes every submission seriously, but I just can’t respond to every email solicitation any longer, as much as I’d like to.”

Now, if he has already taken a meeting with a founder, Bahn claims he will “never ghost” them. 

“When I have to pass on a deal, I will explain why I am passing and share some feedback,” he said. “This is a simple etiquette that I wish more VCs would do more consistently as well.”

Red flags that will lead to rejection 

Ironically, one investor who wished to not be named cited frustration with AI-generated founder cold outreach, telling TechCrunch: “It’s so much that it’s drowning out all the genuine outreach. I can tell it’s AI-generated because I get dozens with the same structure, but different words and there are always some weird inaccuracies. It’s just going to burn all written outreach as a channel to reach new people.”

So, while VCs may love to back AI startups these days, many of which write emails, they don’t want to be on the receiving end of them.

“Eventually, we will just filter out any email from an unknown sender because it’s likely an AI-generated message,” she added. “So to meet someone new, you’ll literally need to run into them socially (warm intro or in person). Back to the stone ages!”

One thing that really annoys Bahn is a lack of self-awareness. Don’t try to claim that your startup has no competitors or faces no existential risks, for example.

Bahn typically asks founders during a pitch what could kill their businesses. A shocking number of founders will respond: nothing.

“Anyone with simple self-awareness knows that absolutely is not true,” he said. “So many things can threaten their business: competitors outperforming; markets facing new compliance or regulation; a new pandemic.”

As a potential investor, Bahn wants to know that you not only see the risks, but have plans to mitigate them. “As the legendary CEO, Andy Grove of Intel, once said: only the paranoid survive,” he said.

Mohnot says if a founder can’t explain how they’ll grow their business beyond an initial concept, he takes note. But the reverse is also true: Unrealistic expectations is a red flag, noting he’s turned off by founders who claim their startup will “immediately disrupt an entire industry” or are projecting “wildly optimistic financial projections without solid evidence.”

Other things that he finds to be a turnoff: visible tension or lack of complementary skills among founding team members, suggesting potential collaboration issues; lack of technical depth or an overemphasis on fundraising as opposed to “building a sustainable, valuable business.”

Rex Salisbury, founder and general partner of Cambrian Ventures and former partner at Andreessen Horowitz (a16z), wants to see that a founder is on top of things. He views a pitch deck with a date in the file name that is six months old as a red flag. Misrepresenting numbers, however, will get you cut off from Salisbury altogether.

Founder behavior 

There are other behaviors that will end your conversations with VCs. For Bahn, if a founder says something racist or sexist, they’re cut off.

“A founder actually once called a competing founder the c-word in front of me,” he shared. “I have no tolerance to spend the next decade working with someone that has such little respect for other people.”

Founders should also keep in mind that even if an investor rejects them now, they might consider working with them later. So being disrespectful when getting turned down will likely kill any chance of that, and could also cause the VC to never talk to a founder again.

Bahn says sometimes his firm provided detailed feedback on a rejection and then that founder would “turn around and call you names and/or even threaten you.” He notices this happens more to his female colleagues than to himself.

“I’m grateful when those moments happen because it means we made the right choice to not choose to work with that founder,” Bahn told TechCrunch. 

“That person is also blacklisted — we will not respond to that person ever again, and the interaction will be recorded in our internal database, so that our institution can avoid them forever,” Bahn adds.

All of the VCs, naturally, said dishonesty is an instant deal killer. Addie Lerner Katz, founder and managing partner of Avid Ventures, pointed out that dishonesty can take place in a variety of forms, including exaggerations and a lack of transparency. 

She’s also turned off when founders speak negatively of current or past investors or colleagues. Negative reference calls are another cause for pause for Lerner Katz.

“Across each of these buckets, we take ‘yellow flags’ very seriously and usually view them as disqualifying,” she told TechCrunch.

Mohnot recalled an incident where a founder lied about a deal with another startup. The other startup happened to be in Mohnot’s portfolio “so a quick text message sorted that one out.”

But lying in general about metrics, team capabilities, market size or technology performance, will often also be easily exposed by the VC.

“It happens more often than you think,” Mohnot said.

All of the VCs still think there’s no true excuse for not sending a simple, “no thank you” follow-up to a founder if they actually had a pitch meeting with a founder. As Bent put it, ghosting happens anyway.

“I’m not saying any of these are good reasons. It’s the reality. It’s the game,” she wrote.

But given the risks of behaving badly to a VC who has stopped talking to you, she also suggests the golden rule applies to both parties. “Treat people how you want to be treated.”