VCs lie. Everyone knows that or at least suspects it.
What you don't know is whether they're lying to you or to themselves. I can't tell you how many times I've heard an entrepreneur make a generalization about VCs based on a few meetings that was completely wrong--and they were usually basing their statement off what the VC told them.
Often, it's that the company didn't have enough traction, which could mean either one of two things:
1) The VC just didn't like the idea or the founder, but didn't want to just come out and say it, so they raised the bar to a level the founder wasn't capable of hitting anytime soon--which is lying to the founder.
2) Or, they just don't really take this kind of early stage risk, but they call themselves opportunistic, which is mostly lying to themselves, and kind of lying to the founder, too.
Logic would dictate that you either don't invest at this stage, or you don't like the company, or you don't like the founder. One of those things has to be true when you pass.
When you aren't honest about why you passed, word gets out into the market on whatever you made it, and it grows like the worst kind of fake news:
VCs don't invest in food (Blue Apron).
VCs don't invest in brick and mortar (WeWork).
VCs don't invest in women (Rent the Runway, Zola, Houzz, Modumetal)
VCs don't invest in education (General Assembly)
VCs don't invest in... Yeah, you get it. Just about everything I've heard VCs don't do, I can think of an exception--and that's the key. VCs invest in exceptions. Given that we'll see thousands of opportunities for every one we invest in, it is the exception that we ever invest in anything.
Most of the time, we say no.
Our default is "no", but the process dictates that we're supposed to come up with a reason everytime we do. Sometimes, that reason is just, "It didn't get me to a yes," and they can't figure out why it didn't, so they make something up.
On top of these falsehoods about VCs that get out into the market, you've got entrepreneur cognitive dissonance. You go into a meeting thinking you've got something good, and when an investor tells you no, your inclination is to be dismissive of the investor. They didn't understand because X. They were stupid. They don't understand your market. They're not risk takers.
Very rarely do I ever see a founder attempt to raise money and say, "Hey, you know, this idea wasn't nearly as good as I thought it was, and the fundraising process helped show me that."
Even fewer times do I hear, "The fundraising process helped me understand that I'm not really prepared to run this business."
Being anti-founder is pretty taboo, so the community is always going to point figures at investors before they'd ever suggest to a founder that maybe they're not cut out for this.
It's only after absolute failure, burned friends and family money, burned savings, and probably a year or two, do founders ever really admit these kinds of things.
I should know. That's what I did. I blamed investors for my own shortcomings as a founder. So, yeah, add a third lie to that list.
So, whatever you heard, you probably heard it wrong--because usually VCs are lying to themselves, lying to you, or you're lying to yourself.
Getting the truth in venture capital is really, really hard, so just be careful when you're spreading fake VC news.