Venture capitalist Bill Burnham describes in his blog why venture capitalists never say "no" to entrepreneurs. Some insightful ways of describing why such behavior is so, Bill writes (bracketed text is mine):
… The issue with saying “no” in the venture business is that there’s really isn’t any upside to saying “no” …
… You might be saying “no” to providing the initial funding to the next Google or Cisco or Yahoo … you risk [getting] shut out of their next round of financing …
… Saying “no” to any entrepreneur is not fun and creates enemies. It’s
like telling someone their baby is ugly or their child is stupid …… Net, net: no one likes to make enemies and saying “no” is a pretty easy way to do it …
For entrepreneurs not wearing their decoders rings when talking with VCs, the pursuit can seem like playing "hard to get". Although Bill describes his use of language as an "art", it’s really a "craft". Art is for show, craft is for dough. VCs are in the business of making money, and saying "no" doesn’t help that cause.
Steve Shu
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