There is a significant memory from my time as an investor that has always stayed with me.

It was 2018 and I was still relatively new to the VC market.

In the beginning, I was just trying to find my footing. So, when I encountered a founder who I didn't think we would invest in (which was the case for 99.9% of the founders I met), I would give generic rejections like:

• "You're too early for us."
• "We need to see more traction."
• "We aren't investing in this market right now."

Sometimes those were valid reasons for rejecting companies, but most of the time, they weren't.

Then, I met a founder who, like most founders, wasn't good enough. In fact, I didn't think he had the qualities of a founder at all, even though I quite liked his personality.

He seemed really desperate to know why he was constantly getting rejected, and I felt obligated to tell him the truth. However, doing this broke one of the cardinal sins of being a VC — telling the founders it's about them.

I got on a call with him and told him straight up that I didn't think he had the qualities of a founder and that he was missing some key components, such as executing on what he needs to do to succeed. I made sure to provide him with constructive criticism on what he needs to improve and work on to make us want to invest in him.

As you can imagine, he wasn't very happy. In fact, I had never had someone so angry at me before! He told me I knew nothing about business, that I was the worst investor he had ever met, and that he hopes I fail in my career and personal life.

I was shocked, to say the least, and couldn't work properly for the rest of the week.

My colleagues consoled me, and the more experienced members of the team shared their own stories of similar experiences.

You see...

Founders get angry at VCs for not being truthful. I understand why you do. But you have to realize that due to the nature of investing and what it entails, we usually can't be completely truthful.

Most founders think they want to hear the truth, but most of them can't handle it.

Think about it, VCs always talk about how important the team is. Yet, how often do they reject founders because of it? Very rarely.

So, why are they most likely rejecting you?

Because of 3 reasons:

1. You aren’t special enough

Investors meet hundreds of founders each year but only invest in one or two. They are not looking for average individuals; they are looking for the exceptional ones. The ones who can achieve great things and outshine the rest.

This is the most common reason why investors reject founders. If we don't believe you are one of those exceptional founders, we will reject you immediately.

Whilst doing these we are thinking of 8 major questions on whether you are good enough, and if you don't pass this, then we will decide you aren't good enough.

But the problem is that defining what makes someone "special" is not easy, as it can vary among different investors.

In fact, this is why fundraising can be challenging. It requires subtle distinctions, a perception created through a process, and a bit of luck.

However, there are common traits among all the "special" founders I have observed:

1. They are domain experts.
2. They excel in communication.
3. They execute tasks faster than others.
4. They inspire others to join them on their journey.
5. They have unwavering belief in their own abilities.

If you can meet these five points, you are on the path to becoming one of the select founders that investors will invest in.

2. We think you have co-founder problems

Co-founder problems is the biggest reason for why companies end up failing. A big test on how we decide you are good enough is on 3 things:

1. Is your co-founder as good as you?
2. Do we think you are working well together?
3. Do we think you will all work on your own tasks well?

If we think you can’t get good co-founders or employees it shows you can’t hire well (which means you aren’t “special” enough).

For the others, it’s more about whether we think you will last and actually scale this company properly.

At the end of the day, investors pick teams. So you have to show them why you and your team are great. 

3. We don’t like you

Sometimes, we just don’t like you. It could be due to a vibe or personality clash, but if we feel that we wouldn't work well together, it doesn't make sense for us to invest.

I have personally witnessed this with some funds where they liked the company but couldn't envision working with the founder from a personality point of view.

Even for myself as an investor, I decided to reject a founder purely because I felt something was "off" about them. It could've just been a bad day for them, but for me it just didn't feel right to carry on the conversation.

Remember, investing in a company is a decade-long commitment. So if you think about it like this, if we can't even tolerate your presence after 4 hours, how can we possibly handle you for the next 10+ years?

So sometimes, it's not really about you or your company, but more about whether we can have a pleasant dinner with you without despising ourselves.

At the end of the day, you just need to be a good person to hang out with.

Luckily, there are tell-tale signs of when an investor likes you.

In conclusion

Whilst you may hate it (we all do), these are the major reasons for why an investor is actually rejecting you when it's because of you. As you can imagine, all 3 of these are emotionally driven, not logical.

So when you think about how you can make sure an investor wants to invest into you, you have to think emotionally. That's the key to becoming a fundraising founder.