An entrepreneur raising their A Round recently shared that one potential VC passed while telling them they wanted to do the deal “but couldn’t convince my partners.” This (and other variations such as “our partnership couldn’t get aligned around this one”) can be confusing. Here’s my guide on how to interpret:

1) “I Didn’t Want to Do This Deal & Never Even Showed It To My Partners”

Ahh, the soft pass. Didn’t really want to tell you know so blamed “the process” even though it was never even shown to the partnership. Bad VC.

2) “I Did Want to Do the Deal but Got Pushback & Didn’t Have Conviction/Time/Political Capital to Spend”

Ok, this one can be a little more complicated. It’s more like Frustrating VC, not Bad VC. Partnerships are supposed to have a constructive tension to these sorts of discussions and consensus deals rarely turn out to be the most successful, so it’s not the “pushback” that’s annoying, it’s whether or not your VC rolled over right away and how they’re portraying it to you. If your potential investor went in fired up and came out with questions/pushback which changed their conviction in the deal, that’s different than still having conviction in the entrepreneur but not the ability to get the deal done from a process-standpoint. Or maybe their partners are right and you’re just a bad deal 🙂

3) “I Couldn’t Get Enough Support from Partnership Even Though I Tried Really Hard”

It happens. Just wish the VC would say “we passed” rather than the passive aggressive blaming of partners – getting deals done require some support (but not necessarily consensus). Forcing it through wouldn’t be good for the founder because they’d be left with a fund that is only half-committed. That said, with Homebrew I’ve started to see that the best VC partner don’t get “surprised” at the last minute by their partnership. And they don’t see it as a question of approval or not, but rather is the VC partnership working well together to help collectively make better decisions?

So general advice for founders raising capital from VCs

• Understand the decision making process at the firm
• Use your lead partner to help you understand the firm’s general sentiment towards deals like yours (partnerships have long histories and they will/won’t like deals because it reminds them of successes/failures in the past)
• Help your lead partner with their partners. You want as many advocates in the partner meeting as possible. Work with, but not around, your lead partner to ID backchannel references you can be providing, etc