What are the best ways to provide feedback to deal sources who bring you low-quality deals?

As a venture capitalist, you rely on deal sources to bring you potential investments that match your criteria and vision. However, not every deal source can deliver high-quality deals that meet your standards and expectations. Sometimes, you may receive low-quality deals that waste your time and resources, or that do not fit your strategy and focus. How do you provide feedback to deal sources who bring you low-quality deals, without hurting your relationship or reputation? In this article, we will share some best practices and tips on how to give constructive and respectful feedback to deal sources, and how to avoid common pitfalls and mistakes.

1 Why feedback matters

Feedback is a vital part of any relationship, especially in the venture capital ecosystem. By giving feedback to deal sources, you can help them improve their deal screening and selection process, and align their criteria with yours. You can also signal your preferences and expectations, and build trust and credibility with deal sources. Feedback can also help you avoid missing out on future opportunities, as deal sources may be more inclined to share deals with you if they feel valued and respected.

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Ankit Anand

Founding Partner at Riceberg Ventures
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Having clear communication helps save time and manage priority on both sides. So, giving feedback is essential to establish suitable filters. In my experience, building in public helps give such feedback as people already know what kind of deal fits you and what not. So when I reiterate to them, they won't take it personally. I prefer to explain to them your thesis again, explain your critical criteria, and give feedback on the deals they brought and why it doesn't fit within that bucket. After a few such cycles, they get it right and start bringing deals that fit you well.

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2 How to prepare feedback

Before giving feedback to deal sources, it is important to prepare it carefully and strategically. First, consider the source of the deal. Ask yourself questions such as, is it a referral, a cold outreach, or a network connection? How well do you know the deal source, and how often do you interact with them? Additionally, evaluate the quality of the deal. Consider factors such as the market, team, product, traction, and valuation. Furthermore, determine the best timing for giving feedback and how urgent or competitive the deal is. Finally, decide on the mode of feedback. Will you call, email, or meet in person? Will you use a template, a scorecard, or a customized message? By preparing your feedback based on these factors, you can tailor it to the specific situation and deal source while avoiding being generic or vague.

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Ankit Anand

Founding Partner at Riceberg Ventures
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The more clearly established your evaluation process, the easier it is for you to give feedback. As a VC, it is essential to set up a process that filters startups that may not fit your thesis. Of course, after you identified what fits within your thesis and is interesting for you to evaluate, the further decision becomes subjective. Once you have taken the deal to the next step and then dropped out for some reason, the source won't be offended. So, you primarily need to worry about the first part, which you should set up as objectively and transparently as possible. And once that is established, you can directly share that feedback with your source without being generic while avoiding double work.

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3 How to structure feedback

Once you have prepared your feedback, it's important to structure it in a clear and concise way. A useful framework is to start with a positive, such as thanking the deal source for their effort and interest, and mentioning something positive about the deal. Then, explain your decision for passing on the deal, being honest and specific but not harsh or rude. After that, provide suggestions on how they can improve their deal selection or screening process, being constructive and helpful but not prescriptive or arrogant. Finally, end with a positive by reaffirming your appreciation and respect for the deal source, expressing interest to see more deals from them in the future, and offering to provide more feedback or guidance if needed. By using this framework, you can give feedback that is balanced and respectful while encouraging the deal source to improve and learn.

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4 How to avoid feedback pitfalls

When giving feedback to deal sources, it's important to be aware of potential pitfalls and mistakes. For example, if you give feedback too late or too early, too often or too rarely, too harshly or too softly, or without context or evidence, you may not only lose the trust of the deal source but also miss the chance to influence the deal outcome. To ensure that your feedback is timely and appropriate, provide relevant and credible data and examples that support your feedback and explain how they relate to your criteria and decision. This will help enhance your communication and collaboration with the deal source.

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5 How to handle feedback reactions

When providing feedback to deal sources, you may encounter different reactions from them. It’s important to be prepared to handle these reactions and respond accordingly. To do this, you should be empathetic and respectful of their feelings and perspectives. Additionally, it’s important to remain consistent and transparent in your decision and feedback, as well as supportive and collaborative with the deal source. By managing and resolving any conflicts or issues that may arise from your feedback, you can foster a trusting and respectful relationship with deal sources.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the best ways to provide feedback to deal sources who bring you low-quality deals?

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1 Why feedback matters

2 How to prepare feedback

3 How to structure feedback

4 How to avoid feedback pitfalls

5 How to handle feedback reactions

6 Here’s what else to consider

Venture Capital

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What are the best ways to provide feedback to deal sources who bring you low-quality deals?

1

2

3

4

5

6

1 Why feedback matters

2 How to prepare feedback

3 How to structure feedback

4 How to avoid feedback pitfalls

5 How to handle feedback reactions

6 Here’s what else to consider

Venture Capital

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