Most of what a venture fund does is say no. In the survey of 885 venture capitalists by Gompers, Gornall, Kaplan and Strebulaev, firms considered roughly 100 opportunities for every deal they closed. That means almost every founder who talks to a fund hears no eventually. How the fund says it shapes its reputation with founders, with the people who refer them, and with the companies it may want to back later.
Learning how to say no to founders well is mostly about timing and honesty. A fast, clear pass with a real reason costs the fund a few minutes and gives the founder something useful. A slow, vague one, or silence, costs the founder weeks of hope and costs the fund goodwill it cannot easily rebuild. The sections below cover when to decide, what to say, what to avoid and what to keep on record.
Why the way you pass matters
Founders talk to each other, and referrers notice how the companies they send are treated. A fund known for clear, prompt answers gets more good referrals. A fund known for going quiet gets fewer, and the founders it ghosts remember when they are raising their next round.
Paul Graham's essay How to Raise Money gives founders blunt advice that shows how often investors fail at this. He warns that some investors never actually say no and simply stop replying, and tells founders to treat investors as saying no until they make a definite offer. When founders are being taught to assume silence means no, a fund that answers clearly stands out.
There is also a practical reason. A passed deal is not always a dead deal. Companies that were too early last year may fit your thesis now, and a clean, respectful pass is what makes that second conversation possible.
Decide early, and decide honestly
The kindest pass is usually the earliest honest one. Graham notes that investors would like to wait if they could, because waiting keeps options open. For the founder, waiting is expensive.
- Pass at the first stage where you know. If a company is outside a hard rule in your thesis, say so after the first read, not after three calls.
- Do not use "keep in touch" as a soft no. If you would not invest at this stage, say that.
- Set a reply time for every stage and keep it, such as two weeks for an initial decision.
- If you need more time, say what you are waiting for and when you will answer.
- Once the committee or partner decides, tell the founder within a day or two, before they hear it indirectly.
Our guide on how to screen startup applications covers setting reply times and triage outcomes, including the two main kinds of pass.
How to say no to founders: what to write
A good pass message is short and puts the decision near the top. Founders read the first two lines and then decide whether to read the rest, so do not make them search for the answer.
- 1Thank them for the time, specifically: the application, the call, the data they sent.
- 2State the decision plainly in the first or second sentence: "We have decided not to invest in this round."
- 3Give the real reason, briefly, where you can share it. "Outside our thesis because we only back companies at their first institutional round" is useful. "Not a fit right now" is not.
- 4Say whether you would look again, and what would change your view, only if it is true.
- 5Offer something concrete if you can, such as an introduction to a fund that does back this stage, and only if you will follow through.
- 6Close politely, without asking them to keep you updated unless you will read the updates.
| Reason | What to tell the founder | What to record |
|---|---|---|
| Outside the thesis | Which part: stage, sector, geography or round size | The hard rule that did not fit |
| Too early for us | What milestone would make you look again | The milestone and a revisit date |
| Concern about the evidence | The specific question that was not resolved, if you can share it | The claim, its status and the source |
| Portfolio conflict | That you have a conflicting investment, without naming confidential details | The conflicting company |
| Partnership did not reach agreement | That the partnership decided not to proceed, and the main reason if shareable | Each partner's view and the decision rule |
What to avoid when passing
- Silence. Every founder who has taken a call with you should get an answer.
- Fake reasons. "We are not investing in this space right now" when you are, or blaming a partner who did not object, is easy to find out.
- Long critiques nobody asked for. A clear reason helps. A list of everything wrong with the company rarely does, unless the founder asks for detailed feedback.
- Feedback about the founder as a person, such as their manner, accent or presentation style. Keep feedback to the business and the evidence.
- Asking for something on the way out, such as a referral or a pro-rata promise for a future round.
- Stringing along. Asking for more data when you have already decided wastes their time.
If a founder asks for feedback, give one or two honest, specific points about the business and leave it there. Graham's essay notes that an investor who spent significant time deciding probably came close to saying yes, and founders may ask what tipped the balance. A short, honest answer is a gift.
Record the pass and handle the data
Internally, every pass should leave a record a colleague could understand a year later: the stage at which you passed, the reason, who decided, and whether there is a revisit trigger, such as a revenue level or a product launch. That record is what lets you spot patterns, for example a thesis rule that rejects more companies than you meant it to.
Then deal with the founder's information. If founders or their staff are in the EU or UK, the GDPR's storage limitation principle in Article 5 says personal data should be kept for no longer than is necessary for the purpose it was collected for. Decide how long you keep decks and application data after a pass, tell founders in your privacy notice, and delete on schedule. Our guide on GDPR for venture capital funds covers this in more depth, and our pass email template has wording for common cases.
Where Delsivo fits
In the Delsivo design, a pass is always a person's decision. In the pilot release, a thesis mismatch is surfaced for review, never an automatic rejection, and an analyst or partner decides every pass with a reason recorded in the deal's audit history. Any message to a founder that AI drafts must be approved by a person before it is sent.
Retention for decks and other founder content is set by the fund, and deleting a deal removes its previews, indexes and derived copies too. Tracking passed deals with a revisit date or milestone is planned for a later release. See revisiting passed deals for how that is intended to work.
Sources
- Paul Graham: How to Raise Money (September 2013) (checked 6 November 2026)
- Gompers, Gornall, Kaplan and Strebulaev: How Do Venture Capitalists Make Decisions? (NBER Working Paper 22587, September 2016) (checked 6 November 2026)
- GDPR, Article 5: Principles relating to processing of personal data (checked 6 November 2026)
Delsivo publishes this guide and makes software for venture funds, so we have a stake in the topic. Facts about other companies, research and regulations come from the sources listed, on the dates shown, and can change. Corrections are welcome through our contact page.