The 2nd-best answer after YES is NO, BECAUSE…

Raising venture capital (VC) funding is tough. Raising VC funding for the first time in your first company is tougher. Raising VC funding for the first time in your first company without having a mentor who has been through the process to guide you is like climbing Everest in flip-flops.

Unfortunately, this is the real-life situation more and more founders now face. In addition to the fundamentals of raising venture capital – are you the right kind of company with the right kind of growth potential at the right stage for the fund you’re pitching – founders can often be thrown off-track by the responses they get (or don’t get) from venture capitalists (VCs) along the way.

As more cities in the UK are nurturing their startup ecosystems and moving towards a Silicon Valley-inspired environment of ‘give first’ or ‘paying it forward’, founders expect honest conversations and actions that will support them to make the best choices for their startup. When it comes to VC, those expectations are rarely met.

What a founder is really hoping for when they pitch for VC is a big fat ‘YES, we’ll give you the money.’ Duh. But VC funnels are wide at the top and narrow quickly. The vast majority will not get what their hearts desire. What they need to know in this case is why it’s a no and what they can do next. The next best answer they can get after ‘Yes’ is ‘No, because…

During our training for Student VCs, we instil into them the importance of two things when founders are pitching us:

  1. Never waste a founder’s time; and
  2. Be as useful as you possibly can be.

We educate our students on how venture capital works, and the funding landscape as a whole in their city and more broadly, so they can pass this information onto founders they meet. This ties into our educational mission not just for the Student VCs but for any startup who pitches Campus Capital.

That’s why when I saw a company go through our entire process, saw the Student VCs make the right investment decision for the right reason, and give the best ‘No, because…’ you’re ever likely to get from a VC, I sat back, smoked a cigar* and figured my job here was done.

Here’s what I read**…

Dear Founder,

We’ve spent a while discussing your business with the rest of the team and it really has been a difficult decision. As a group we feel that at the moment VC funding isn’t the right way forwards for Your Startup.

The reasons behind our decision:

VC investors typically are looking for rapid growth and we feel the current structure of the business doesn’t really suit this. Of course it is difficult to develop the products to sell without the funding to do so, however the cost of production is a major concern for us as well as the limited market to initially target. For the business to grow at the rate we would be requiring, the product would really have to be targeted towards households to get the sale numbers in. The price of the product clearly makes this difficult, and therefore assessing the cost and time of production is more of a priority than funding at the moment. Of course we would love to see your products used across the country, and given the creativity and dedication you have demonstrated in the making of this first product we feel you would be able to develop numerous other products in the future. Our main concern lies with the structure of the business at this stage and how it would scale.

Some suggestions that we hope are of use to you:

Having a VC investor on your back wanting relatively quick returns can be a major hindrance to a business in its infancy, and we feel you would benefit more from reaching out for advice from social enterprise initiatives. Have you spoken to the enterprise zone at Your University to discuss how you could address the cost of production? Another good place to try would be Your City’s Social Enterprise Network. Addressing the time is takes you to make the product would allow you more time to focus on how you would like to move the business forwards, and people within that network are likely to be keen to help out given the positive social impact your business seeks to make.

We are sorry if this is not the answer you were hoping for, but we really enjoyed talking to you about Your Startup and your passion and dedication for the product was evident. We hope to keep in touch and see how your business progresses over the coming year. If things progress and you feel that you might be VC eligible in the future, we would love to hear from you.

Thanks again and best of luck!

Campus Capital

And this was without ANY interference from the Campus Capital partners. Our Student VCs handled this company independently from application to ‘No, because’.


The top priority of our Student VCs is to find great companies to invest in and to make good decisions about whether Campus Capital should make that investment based on our thesis. But once it’s clear that a startup isn’t right for us, there’s no need to keep them dangling. 1. Tell them quickly and unambiguously (don’t waste their time), and 2.  Give them feedback as to why the decision was made, what steps can be taken (if any) before they come back to us, educate on how VC works if necessary, and point them in the direction of more relevant funding sources and support such as grants and networks (be as useful as possible).

There are a few reasons I’ve shared this email feedback with you. One is to show that we can all learn from engaging with the investment process if we’re open, honest and respect each other on a level. Another is to show that pitching for investment from Campus Capital isn’t a one-shot application. If you get a ‘No, because’, the door is still open, the connection is made. But mainly I’m just incredibly proud of the Student VC team. They’ve shown what we always thought: that Student VCs will be enthusiastic and hungry to learn, will support and share that learning, and will take this programme and the companies they’re engaging with seriously.

We’d love to hear about some of the most useful feedback you’ve received in the past (relating to investment or otherwise) so feel free to drop it in the comments and we’ll pass it on to the teams in a sort-of virtuous learning circle. If you’re thinking of raising investment, then go ahead and Pitch Us. The worst that can happen is a ‘No, because…’

* the cigar was metaphorical

** I anonymised the email. If you’re really unsure which bits I changed, I put them in italics 😉