Dear SaaStr: How Do I Turn Down a Big Multistage VC For Our Seed — But Keep Them Warm for the Series A?
If you’re telling a multi-stage VC that you’ve signed a term sheet with someone else, the key is to leave the door open for future collaboration while maintaining professionalism and optimism.
Do this right — and you’ll have a great, already prepped lead for the Series A. So take the time to do it right, and repsectfully.
Here’s how to do it:
1. Be Transparent, But Positive
You want to communicate that you’ve made progress, but also express genuine interest in working with them down the line. For example:
Email Example: “Hi [VC Name],
I wanted to share a quick update—after a lot of thought and discussions, we’ve signed a term sheet with [Firm Name] for this round. It’s been an exciting process, and we’re thrilled to have them on board.
That said, I’ve been incredibly impressed with your team and your approach. I’d love to stay in touch as we scale and grow, and I hope we can find a way to work together in the future—perhaps as we start thinking about our Series A.
Thanks again for all your time and insights during this process. It’s been a pleasure getting to know you and your team.
Best,
[Your Name]”
2. Highlight the Opportunity for the Next Round
Multi-stage VCs are always thinking about the next round. If you can show that you’re on a trajectory to hit milestones that will make you an attractive Series A candidate, they’ll stay engaged. For example, you might say:
“We’re laser-focused on hitting $3M ARR in the next 12 months, and I’d love to reconnect as we approach that milestone. Your expertise in scaling SaaS companies would be invaluable as we think about the next phase of growth.”
This keeps the conversation forward-looking and positions you as a strong candidate for their next check. And big multi-stage funds all have plenty of examples of deals they ended up doing later vs. earlier. Plenty. For many reasons.
3. Keep the Relationship Warm
Even if they didn’t invest this time, you want them to feel like they’re still part of your journey. Share occasional updates on your progress, especially if you hit key milestones like revenue growth, customer wins, or team expansion. A quick email every 3-4 months can go a long way in keeping them engaged.
4. Avoid Burning Bridges
Don’t frame the signed term sheet as a rejection of their offer (even if it was). Instead, position it as a timing issue or a strategic fit for this specific round. For example:
“We had a lot of great options on the table, and it was a tough decision. Ultimately, we felt [Firm Name] was the right fit for this stage, but I really valued your insights and would love to stay in touch.”
Why This Works
- Keeps the Door Open: You’re signaling that you’re still interested in working with them, just not in this round.
- Positions You as a Winner: Signing a term sheet shows momentum, which makes you more attractive for future rounds.
- Maintains Professionalism: You’re showing respect for their time and interest, which helps build goodwill.
My Take
Multi-stage VCs are always looking for the next big opportunity. If you can show them that you’re on a path to hit Series A metrics—like $3M ARR or 125%-150% YoY growth—they’ll stay interested. The key is to keep them engaged without over-promising.
