Investors say “no” a lot.

Actually…a lot of investors provide confusing euphemisms for “no”, giving the impression that there may someday still be a chance of raising money from them. For entrepreneurs, it might feel a bit better emotionally than outright rejection, but ultimately it’s frustrating as hell. I know what it feels like. I’ve been on the short end of numerous confusing rejections by investors (although some were very, very blunt!) “Was that a ‘no no’, a ‘half no’, or something else that I have to interpret with my VC translation dictionary?”

Knowing full well that saying “no” is important, I still have a hard time doing it. And I’ve given people the bullshit “no”, with a not-entirely-truthful-reason…and it sucks. I’m only 9 months into this angel investor thing, so I’m learning…

I was thinking about this today and realized that the hardest “no” to give in angel investing is when you like the market, you like the idea, you even like the early traction, but you don’t believe the founders have what it takes to really win. How do you tell someone–who has already jumped off the cliff and committed to being an entrepreneur–that you don’t think they have what it takes to be an entrepreneur? How do you even judge that?

I’ve made these judgement calls a bunch of times. I did it at Year One Labs, and I’m doing it now as an angel investor. But when it comes to saying “no” to someone, it’s incredibly hard to say, “I don’t think you have the guts for this, I’m not feeling you as a legit founder, so I’ll pass.” But I guarantee you that a lot of “no’s” are for this very reason, even if investors don’t articulate it this way. I don’t have an answer either. I don’t even know if I’m qualified to make these kinds of calls (and yet I find myself doing it!), and total honesty seems like you’re just being an asshole.

So here’s the thing, if I ever give you a “no” and it doesn’t sound legit, call me on it. I’d like to be constructive even if I’m saying “no”. I’m going to spend more time thinking about this and how to best approach it. I’m going to talk to other people and see how they handle it (maybe some folks will post suggestions in the comments too). I don’t want to give wishy washy, half-baked “no’s” that entrepreneurs interpret as “maybes”, which ends up putting everyone in an awkward position and wastes their time. That’s not fair and it sucks all around. But damn saying “no” can be hard…