Introducing other investors

I am often asked to make introductions to other investors. Once we are committed to leading or joining a round, I love making these introductions. I like the company and the founders and I know showing them to other investors as a "pre-qualified" opportunity makes their job and the job of the founders easier. It builds our reputation with other investors for being a collaborative firm that finds good investments. And it helps the founders raise a larger round for our future portfolio company.

However, many founders ask for introductions to "other investors" once I've passed. This happens most frequently when I haven't even met the team. And sadly it's mostly first-time founders that then seem quite put out when I don't comply with their wishes.

There are a few reasons I decline making these introductions. First of all, I haven't evaluated the company beyond a short look. I probably passed on it because it is outside of my investment scope (e.g. enterprise software, late stage, low growth, no defensibility, weird ownership structure, small market, etc.) or because the team looked like an "unlikely" fit.* In most cases I haven't even met the team. 

That doesn't mean it can't be a good investment for other funds. They may have very different criteria from me. But I have my focus because that's where my expertise lies. And if I started qualifying deals for other investors that do very different things from me, I probably wouldn't be doing much else with my time. What's worse, I probably wouldn't be doing it very well.

Secondly, if the company is in my remit but I pass, what message does introducing the company send to other investors? It's a terrible signal - hey, here's a company I didn't think was good enough for us to invest in. Take a meeting because I value your judgement and time less than my own. You can see the problem. This is terrible for founders and so I end up saying "I'm sorry I don't do that." 

Next time this happens, I'll send the founder this blog post. So they know it's with their interest at heart that I'm not introducing them.