The art of the #dopepass

by Nihal Mehta

At Eniac, we’re constantly obsessing over how we can be one of the most founder-friendly VC firms around. And not just when we write someone a check: We have introductory meetings with a huge swath of startup founders, and we’re always looking to improve that experience for every one of them.

This isn’t something that’s standardized across the firm; we all have different styles. But across the board, our hope is to be helpful even when we don’t invest. As former founders ourselves, we know how frustrating it can be when you put a lot of time and energy into a pitch, then don’t get any value out of it at all — no intros, no feedback, maybe not even a real answer.

Over the years, I’ve developed what I consider to be a repeatable approach, almost a formula that I use whenever I meet a founder. During that first meeting (whether it’s over Zoom or in-person), I try to think of valuable introductions — often from the Eniac Network — that I can offer to the founder.

I’m hoping, of course, that these can be game-changing for the startup, connecting them to other investors, customers, partners, or talent. But it’s also how we begin our diligence process. Through these intros, we get data back on the value proposition of the business, and on how the founder works through a strong lead to generate interest and ultimately close a deal.

After we’ve gotten feedback from our intros, we usually have a solid idea of whether or not the company is a good fit for Eniac. When it isn’t, we try to write a thoughtful pass email, breaking down why we were interested in the deal in the first place, along with why we ultimately decided to pass. And again, this isn’t just the feedback of the Eniac partners — it’s synthesized from the connections we’ve made for the company, and from other experts we’ve asked for advice.

What does that actually look like? Here’s an example of a real pass email that our summer investment associate Leelena Asfaw sent recently (with the identifying details removed):

Hi [founder] — Thanks so much for taking the time to share your vision for [amazing startup] with us. We wanted to loop back with an update on where we were. Unfortunately, after discussing the opportunity with the rest of our team we’ve decided not to move forward with additional diligence. In an effort to be transparent we would love to share some more color around the decision.

We thought you had a strong background, with experience that would translate well to what you’re building here, however we had concerns about the scalability of [your approach]. We believe that [your approach] provides an attractive value proposition for crypto-native users, however we feel that [other details that we should probably redact] makes it less attractive to its intended audience and more aligned with web2 competitors. The latter market is somewhat saturated and we struggled to see meaningful differentiation at this point.

We nevertheless appreciate you taking the time to teach us more about [startup] and for considering Eniac as a partner. We look forward to watching the company grow and if there is any way we might help, do not hesitate to ask.

An important point: When we tell a founder that they should ask us for help, we mean it. Obviously, our portfolio takes top priority, but we still believe in building and maintaining relationships with companies we’ve turned down. If you take 30 minutes to pitch us (and even more time to prep and to answer any follow-up questions), the least we can do is take a few minutes to make at least one high-value introduction.

As we noted when we relaunched the network earlier this year, even after we’ve passed on a company, we’ve introduced its founder to its eventual acquirer, and another to its CTO. Other introductions we’ve made (not necessarily from passes) include:

• founders to big customers
• founders to their co-founders
• founders to their CTO
• founders to another startup that they decide to work for
• founders to their ultimate acquirer
• founders to their spouse (true story!)
• founders to partner at another firm
• founding GPs to another GP

Hopefully we’ll have more and more stories like this as time goes on.

Why talk about this publicly? Sure, we may be patting ourselves on the back a little. But we also want to remind everyone that while the venture capital business requires tough choices, it’s still important to treat founders like human beings. VC is a people business, in which reputation, brand, and integrity compound over time — even if we say no the first time, maybe we make enough of a good impression that founders come back to us with their next big idea, or they introduce us to the next potential unicorn.

Lastly, as we said up top, this is something we’re constantly obsessing over. If you think there are ways we could do better, please reach out!