Unfortunately, you can't always explain why a
venture capitalist chooses to invest in one startup and not in another.
Despite what some will claim, there is no magic formula that
entrepreneurs can follow to assure them funding 100% of the time; these
are just guidelines to follow to increase your chances, but in the end, a
VC's decision is not always about the quality of the company, idea or
founders. It's like in a relationship when one party breaks it off by
saying, "It's not you, it's me," only for VCs they actually mean it most
of the time.
DFJ
Gotham Ventures investor Mark Davis, who blogs over at Venture
Made Transparent wrote Tuesday about how sometimes, even when
looking at a great company with a promising future, VCs (himself
included) still
say no. The reason? Well, for VCs, investing in a startup is a lot
more than just determining whether it will have a prosperous future.
Ultimately, VCs are looking for a financial return on their investment, and while potentially successful startups can mean quick bucks for entrepreneurs, the VC may not stand to benefit as much from investing as they would like. It sounds mean and nasty, but VCs don't exist to simply shell out cash to worthy companies; they have been tasked with taking a venture fund and investing in companies that will provide high returns.