VCs are liars. And so am I.

Feh, just be honest with people. If they get defensive, they get defensive, so what?<p>I'd <i>love</i> to hear you tell me "I just don't think you have what it takes," as that's just going to pour fuel on my fire and motivate me to work that much harder just to spite you.<p>I love negative feedback like that... fuck all ya'll, because when I'm running a billion dollar company and rocking up to your shitty office in my Maserati to ask "how's it going?" I'll be laughing to myself at how pathetic and stupid you were to doubt me.

The reason why VCs will not tell "team is not strong" is because they can be wrong about the team (people can learn, be better, or they can be misjudged etc.) but that mistake might burn bridges.<p>Only real friends will tell you "you suck": so step 1 - get some friends.

This kind of behavior occurs in all walks of life, e.g. in dating.<p>It just goes to show how much investment is based on vague impressions. For example, why shouldn't a founder get frustrated with fund-raising, or be desperate for funding, it's not a reflection on the business idea or feasibility.

&#62; And I see the flip side, people that are past the age of 50 [...] are not capable of creating compelling social products.<p>This tells me everything I need to know about this ass monkey.

Interesting.<p>To the author: I'd definitely want the blunt, unvarnished and harsh truth. No joke! The only way to get better is to get the truthful opinion of people that matter.

Markets are not efficient which is another way of saying that information asymmetry exists.Successful financiers would prefer to keep it that way. What would be a rational reason for divulging why you turned down a potential opportunity? You can't really formulate one.<p>Also, this doesn't have anything to do with VC's per se. It happens in Private Equity, Fixed Income, Credit, Public Equities ...

Why VCs judge people: 1. The team/people do matter 2. They aren't smart/knowledgeable* enough to truly evaluate the merits, weaknesses, etc. of a pitch, so they use people as a proxy.<p><pre><code> * smart/knowledgable are used here loosely to encompass the wide range of reasons why a VC might judge an idea poorly</code></pre>

<i>shrug</i> I used to be part of the "please give me permission to start a business by letting me into your seed program" crowd. My company made it to the final round for a program and the end feedback was they didn't think we could deliver on what we were building.<p>At first, I took it as le insult. An insult against my mad pr0grammer skills.<p>In hindsight, I look at it as: my technology may have been OK, but it wasn't astounding enough to qualify as a revolution in the area and lead a big stampede to my door. It was a harder problem area (NLP). Something simpler with the same amount of persistence and execution may have led to much greater results.<p>In hindsight I appreciate the honesty. They saw it before I did.<p>The challenge is, people aren't ready to hear certain things until they're ready to hear it.

Yeah... honesty is certainly the best policy here. The people who don't have what it takes will either give up and go onto something else, or cause them to plug the leaks and turn the startup into a successful venture. It's win/win here for the founder I think...

I saw that some comments pick-up on VCs being adamant on founder's nervousness and such.<p>Probably, OP should have mentioned different pointers, but still I think that such comments are missing an important point of this post by Josh - honest feedback almost never works.<p>I have managed up to 30 people, [colleagues and HQ people not counting] - 95% of the time honest feedback does not work, mostly because of the:<p>- ego, or<p>- hidden agenda<p>5% it worked with people, with whom I had working relationships, based on mutual trust AND they were all GetDone high performing individuals.<p>So what do you do when you know that honest feedback will not work?<p>Are you going to hit a brick wall with your head?<p>No... you come up with some nice words, etc.<p>You can like such people, value them, but if you feel that they can not accept your honest feedback, you don't give it.

While I totally understand the human nature behind it, I find it a shame that more investors don't offer personal criticism with their rejections. It's a great way for startup founders to grow their skills, at least when it comes to pitching to investors.

In order to believe that "we need to see more traction" is a lie, you have to believe that you are able to identify "good teams" with certainty.<p><i>That</i> is what ticks people off about VC's.

Most people should not be told just to give up completely. I'm not sure why the OP wants to focus on "you just don't have what it takes to run a company" instead of "your presentation skills were lacking, rehearse more", or something like that. For many entrepreneurs, the offense is not in "x needs improvement", but "We believe you are too stupid to improve on x". Even if you believe that, why not just say "x needs improvement" and then wait to see if they really <i>are</i> too stupid to improve on x or not? Why does <i>everything</i> the VC thinks, including have to be shared?<p>There is nothing productive about "you're incapable, just give up" or "you're incapable, go deal with someone who gives people less money first and see if that gives you some capability". These are all deflections of the real problem. Why not try "We were concerned that you appeared nervous when asked how your site would handle potential copyright issues" instead of "you just can't do it"?

The discussion between VCs and entrepreneurs is difficult because it's handled by everyone concerned, directly.<p>That's why we have lawyers; that's why artists have agents. People who don't care one way or the other and for whom nothing's ever personal.<p>Entrepreneurs need professional pitchers -- agents who would be able to gather honest feedback and tell it like it is.

Honest question: How does YC give feedback to companies that are rejected? Is it pretty much like the author described? Or do they take pains to be truthful? (given that PG is known to speak his mind)

Is the hint to Epimenides on purpose?

Sorry, what is a "VC"?

Dear OP:<p>You always say the team is important. I couldn't agree with you more.<p>The Team is important not only in the startup, but also in the group of people that make up your investors. Thus, given that we've decided your team is not strong enough to be investors in our company we're going to pass.<p>In the future, it might be wise to hire partners who are not biased based on age, or prone to making decisions based on irrational conjecture (such as a presenter in an important meeting being nervous.) Also, be aware that one of the signs that a VC firm is not going to be a reliable partner is a pattern of cargo-cult investing. Just because Instagram just got sold for $1B does not mean you should be investing in every social-mobile-location-picture sharing startup (not run by anyone over 50, of course!) The best opportunities, by definition, are the ones with a novel approach.<p>Thank you for your time, and if you should have a major turnover in partners, feel free to contact us again in the future.<p>Signed-<p>Startup Founder

Do angels require liquidation preferences and other arbitrary terms (like paying their lawyer fees) that VCs do? Do angels impose bad decisions? (I've seen more than one company lose %50 of its ultimate market value as a result of a VC imposing bad decisions on them.)<p>Are angels more or less likely to follow the heard or be arbitrary? (EG: he's nervous while pitching us therefore, he must be hiding something)<p>Since Angels these days have rather large amounts of funds, and the cost of running a company is much smaller -- I believe we'll be able to service up to 200 million customers for about $300/month operating costs excluding salaries which nobody is taking right now.<p>Do we really even need to deal with VCs anymore?<p>Why not take a series of Angel investments? Seems many companies could be done in three:<p>$100k: Seed stage<p>$100-$500k: Have product/market fit and getting traction.<p>$500k-$2M: Profitable and want to spend heavily on marketing and growing the team.<p>Seems like those rounds should be sufficient for a lot of companies, like say Instagram. And they're small enough to be handled by a syndicate of angels. And if the company is of the type that it then needs to raise $5M-$15M for further growth, at that stage you could probably get VCs in on much more reasonable terms.