When I turn down the opportunity to invest in a startup, I really turn it down.
I try and say exactly what I don't believe will happen, or why I don't believe in what you're doing. In essence, I'm setting myself up to either be spectacularly wrong or to be right.
The last thing I want is to not have a view on the space. My job is to have views--because not making a bet is making a bet. If I don't have clarity on something, it means that I don't think the space and the opportunity size is big enough to get clarity.
What I never say is "I love what you're doing, but...". Sugarcoating isn't helpful to entrepreneurs. You never want to get a rejection and scratch your head over why the person turned you down.
I'll tell you right now that I don't think a new form of video messaging is either a) something that consumers really want or b) a great way to make money because monetization just creates friction in the communication process.
I could be 100% wrong about that, but that's my bet. We'll know in a few years if I was right or wrong. In my mind, uncertainty should never be a reason for an early stage investor to turn a deal down. The world is uncertain and making bets in an uncertain world is what risk is all about.
So, I'm certain that I'll either be certainly right or certainly wrong--but I'm always certain.
I've been helping to syndicate a few opportunities lately and what has really surprised me was how wishy washy the turndowns were. Entrepreneurs are sending me back notes saying "They turned it down, but I'm not sure why." It's unclear what piece of information they were lacking or how someone could have gotten them over the hump. It doesn't help them improve their pitch or adjust their model. It just feels like the VC wasn't that interested in the first place and so they're not sure what the interest was in the first place. If you take a smart home pitch, and you turn it down because you're not certain how the smart home segment will play out, what you should have done was tell the entrepreneur this, but offer up the opportunity to shed some light. This way, they know there's a low chance of investment, and they can choose whether or not they want to spend their time educating you.
If an entrepreneur is going to invest their time pitching me or having a meeting--I'll do my best to invest my time to have an opinion.
It may sting a little when you get a direct pass from me with specific feedback, but you always know where I stand. At the end of the day, my bet is that you'd rather get that. You'd rather know exactly why I didn't do a deal than scratch your head over some opaque "VC speak".