Write a professional, respectful, and clear pass letter to a startup founder. The letter should:
1. Express genuine appreciation for the opportunity to learn about their company
2. Provide 2-3 specific, thoughtful observations about what you found compelling about the business
3. Clearly but kindly explain why you are passing on the investment opportunity at this time
4. Offer constructive and specific feedback that could be genuinely helpful to the founder
5. End on a positive note that leaves the door open for future conversations
The tone should be warm but direct, avoiding vague platitudes or generic rejections. The letter should demonstrate that you thoughtfully considered their business and respect their time and effort.
Dear [Founder Name],
Thank you for taking the time to share Contractly with us last week. We genuinely appreciated the opportunity to learn about your vision for transforming how mid-market companies handle their contract workflows.
Your product's integration capabilities with major CRM platforms stood out as particularly well-executed, and we were impressed by the early traction you've achieved with 40+ paying customers in just 8 months. The customer testimonials you shared from Acme Corp and TechSolutions were compelling evidence of the pain point you're addressing.
After careful consideration, we've decided not to move forward with an investment at this time. While we believe in the problem space, our investment thesis currently focuses on companies that have achieved larger scale with $1M+ in ARR, particularly given the competitive dynamics in the contract management space.
As you continue to grow, we'd suggest focusing on developing deeper vertical-specific features for 1-2 target industries rather than maintaining a horizontal approach. The customers you mentioned from the healthcare and financial services sectors seemed to derive particular value from your solution, and specializing might help accelerate your growth and differentiate from larger incumbents.
We would genuinely welcome updates on your progress in the coming months, particularly as you hit your next revenue milestones. This space remains interesting to us, and we're impressed with what you've built so far.
Wishing you and the team continued success,
[Your Name]
Associate Partner
Venture Capital Firm
Dear [Founder Name],
Thank you for presenting CyberShield to our investment team last Tuesday. We valued the opportunity to learn about your approach to solving the growing challenge of data breach prevention in the healthcare sector.
Your team's deep cybersecurity expertise is evident, particularly your CTO's background in developing security protocols for major healthcare systems. We were also impressed by your innovative approach to integrating compliance requirements directly into the security monitoring workflow – this clearly addresses a pain point we've heard from healthcare administrators.
Despite these strengths, we've decided not to pursue an investment at this time. While healthcare cybersecurity is certainly a critical need, our fund's investment strategy is currently focused on later-stage companies with established sales processes and more validated go-to-market strategies. Your current stage, with three pilot customers still in implementation, falls earlier in the cycle than our current mandate.
Based on our experience with similar security startups, we'd recommend considering a more focused approach to your initial target market. Rather than addressing both hospitals and insurance providers simultaneously, concentrating your limited resources on one segment first would likely accelerate your path to product-market fit and make customer acquisition more efficient.
We would be happy to reconsider an investment when you've completed your pilot implementations and established a repeatable sales process. Please keep us updated on your progress over the coming year, particularly as you expand beyond pilot customers and refine your go-to-market strategy.
Wishing you and your team success in building this important solution,
[Your Name]
Principal
Venture Capital Firm