The most common VC rejection by founders who end up building the world’s most transformative companies seems to be:
The market is too small.
Other variations:
- Unfortunately, the size of the market didn’t make sense for our investment model.
- The price of the round felt too expensive for our strategy. (An indirect assumption that the exit-to-entry multiple would be south of a 100X. In other words, there’s a cap on market size. Aka small market.)
There are plenty of public examples of founders (i.e. Airbnb, Instacart, Uber, Facebook/Meta, Shopify, eBay, Ford, NVIDIA, etc.) sharing their rejection emails from the first couple hundred VCs they’ve met. But also, I’ve been lucky enough to read a lot of the memos that GPs and partners have written in the decades past on their anti-portfolio.
Yep, that’s the blog post for today.