“I love this team and your product is amazing! I just couldn’t get my partners there. We’ll be cheering from the sidelines!” How many times have you heard that?

Well, you won’t hear it from me.

“They Never Give a Reason”

I recently spoke with Mike*, the founder of a very interesting new fintech startup. He seemed like a solid entrepreneur and I loved the market — but there were some problems.

“This is a great market and you know a lot about it. But I need you to get a technical co-founder or it will be really hard for you to build this business. I also need you to get into market and start making some revenue before we go further,” I explained.

I was afraid this candid feedback might upset him. But Mike was delighted.

“Whenever someone passes, they never give a reason. You’re lucky to even hear from them at all!”

This leaves Mike with no idea how to improve. For once, he was getting some actionable feedback.

Investor as Yes Man

So, why do investors give BS feedback and then pass?

In startupland, investors live or die based on their reputation. If your rep is good, the best deals come to you. If it’s not, you’re out in the cold.

If you’re candid with a founder, he might get offended. Then, he tells anyone who will listen that you’re a jerk and best avoided.

If you spew platitudes, maybe the founder never figures out how to improve his business.

But who cares? You’re passing anyway!

Even if a VC gives you a check, you still get Mr. Yes Man. He’s nodding and telling you you’re killing it — even when you know the company is in trouble.

And why wouldn’t he? After all, this isn’t one of his winners. No sense risking a bad reputation.

Founder Focused, Not Founder Friendly

At the peak of the market, investors fell all over themselves trying to be the most “founder friendly.” But we forgot what entrepreneurs actually need.

They don’t need a friend. They already have those.

They need a business partner. And while a partner shouldn’t meddle, he does need to give candid feedback when asked.

That’s why I strive to be “founder focused,” a phrase I first heard from Doug Leone at Sequoia.

Leone is obsessed with helping founders he invests in. But sometimes, that means telling them the difficult truth.

The new product isn’t so great. The company is running out of money.

Leone’s approach might not be warm and fuzzy. But it helped build Google, ServiceNow and DoorDash.

Wrap-Up

To be great at our jobs, we investors have to take the risk of pissing someone off.

I always try to be polite. But I also try to be honest.

Founders pour their lives into their startups. Jobs are on the line.

We owe them nothing less.

What do you think of founder friendliness? Leave a comment and let us know!

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*Name changed to protect privacy.