Why VCs Say No: The Real Reasons Behind the Rejections
When a VC passes on your startup, it often feels personal. But in reality, most rejections come down to patterns they’ve seen before. Sure, some decisions hinge on chemistry or a gut feel, but most are rooted in a rational (if sometimes unspoken) assessment of risk and return.
That said, storytelling still matters—a lot. Founders often fail to tell the right story. You need to make your vision clear and believable, your momentum feel part of a deliberate and executable plan, and your success feel inevitable. VCs see dozens of decks a month, many tackling similar problems. Your job is to make yours stand out.
Here are the most common reasons why investors pass, grouped into themes they’re evaluating in every pitch.
Selling the Vision: Does the Story Land?
The founder lacked energy or passion in the pitch
If you don't come across as excited about the problem you’re solving, why should anyone else be? Your job in the pitch is to transfer that belief and conviction. Do you feel credible? Do you energize the room? Or are people checking their phones halfway through?
You're not solving a mission-critical problem
The best startups solve urgent, expensive problems. If you’re solving something “nice to have,” expect more skepticism.
You haven’t convinced them there’s a $100M+ business here
You might have shown a path to a healthy $10M a year business—but that’s not what VCs are looking for. They’re playing a different game. Your job is to convince them there's potential for a $1B+ outcome.
Product: Is This Good Enough to Win?
The product isn’t good enough (yet)
Sometimes the execution just isn’t there. If the product feels clunky, lacks focus, or doesn’t clearly deliver value, VCs might assume customers won’t love it either.
No big vision for where the product is going
Founders often pitch the product as it exists today, especially if they’ve just spent months selling to early customers. But investors want to know where you’re headed. What's the big product vision?
No clear product roadmap to get there
It’s one thing to say where you're going—it’s another to show you know how to get there. A clear, compelling roadmap shows you’ve thought through the steps to make that vision real.
No clear product defensibility
If success attracts competitors, why will you still win? What’s your moat? VCs want to know you’re not just building a feature that someone else can replicate.
The Market: Is This a VC-Backable Opportunity?
The market feels saturated—but your differentiation isn’t clear
Markets with lots of players aren’t necessarily bad—but you need to show why you’re meaningfully different. If you can't clearly and succinctly explain your USP to an investor, they'll assume you'll have similar struggles explaining it to your potential customers. This is one of the reasons why I think positioning is a key skill for founders.
Investor has already backed a competitor
Most VCs won’t invest in companies that are direct competitors as it risks becoming a conflict of interest. If they’re already committed, it’s likely a pass. They may not have realised quite how much overlap there would be when they invited you in for a chat, so this may only become clear partway through the pitch.
Investor has backed similar companies that failed
Past scars run deep. If your business looks too much like a previous portfolio company that didn’t work out, the road to investment just got harder. They probably got you in hoping that you'd be able to convince them why this time things would be different, but this is understandably an uphill struggle.
Investor is potentially overexposed to the sector
Most generalist funds want to spread their risk across a range of different sectors. If they’ve already got three AI health-tech startups in their portfolio, they may struggle to justify a fourth. That doesn't mean they won't invest, but the barrier may be a lot higher.
You’re asking for too much—or offering too little
That £5M seed round on a £25M post-money valuation might sound ambitious—but does it stack up to others in your space with similar traction? What you think sounds confident might come off as naïve. Focus on how much money you actually need to hit the next meaningful milestone—and let the market help determine the valuation.
Doesn't fit with the investor’s thesis
Even if your business is solid, it might not align with the investor’s focus, stage, or expertise. That doesn’t mean it’s not a good idea—just not a good fit for them. For instance I regularly get sent pitches for US based Series-A companies despite our focus being on first check investments into the European ecosystem.
Go-To-Market & Traction: Can You Deliver Growth?
No clear go-to-market plan
This is one of the areas I personally fixate on. It’s easy to come up with a good idea and build a decent product. What kills most startups is the inability to connect that value to a large enough audience, fast enough. That’s why I wrote The Growth Equation—because this is where so many founders fall short.
Unclear ideal customer profile (ICP)
If you can't describe your target customer precisely, it’s hard to build a scalable GTM strategy. VCs need to believe you know exactly who you're building for, and how to connect with them.
The plan isn’t working (yet)
It’s fine if you’re early—but investors want to see that you’re making progress. If user growth, engagement, or revenue aren’t moving in the right direction (i.e. up and to the right), it raises red flags. Just be aware that this is less about hitting specific numbers and more about your rate of change. Or as somebody once said to me, VCs are more interested in curves than dots.
Insufficient revenue for your stage
You may have traction—but is it enough for the round you’re raising? If others at your stage are doing double your revenue, you might not look ready.
You’ve failed to hit key milestones—or didn’t define them
This is especially true if you're a few rounds in. Last time you spoke to that investor you gave them a really aggressive hiring plan, product roadmap or set of targets. It's now 18 months later. You may have forgotten that early conversation but they've gone back to their notes and seen that you failed to deliver on your promises.
The Team: Can You Execute?
VCs know they’re going to see a dozen other startups tackling the same problem. What they really want to understand is: Why are you the team that’s going to win?
Weak founder–problem fit
Do you have a personal connection to the problem? Have you lived it, studied it, obsessed over it? If not, you better have a great story. Even something simple—like building a tool for tradespeople because your dad was a builder—can help establish credibility.
No evidence of past execution
Investors want to reduce execution risk. That means looking for signs that you’ve done something similar before—or at least have a track record of shipping fast, learning quickly, and making good decisions under pressure.
Struggles to build or retain top talent
Hiring is hard right now. If you don’t have a strong network of designers, PMs, engineers, and marketers ready to jump in, it’s a red flag. Even better if you’ve already got some of them lined up, pending investment.
Founder lacks an ownership mentality
Do you act like a founder or an employee? Are you scrappy, accountable, and all-in? VCs are looking for signals that you own the outcomes, not just the process.
Final Thought
Getting turned down by a VC is never easy. But understanding the real reasons behind the “no” can help you improve your story, sharpen your strategy, and find investors who do believe in your vision.
More often than not, it’s not about you—it’s about the signals you’re sending, the patterns they’re seeing, and the story you’re telling. So make it count.