VC Fund Maths—The Hidden Logic Behind Why Investors Say No

You get the warm intro. You nail the pitch. The investor’s even nodding. And then…

“Love it. But we’re going to pass.”

It’s frustrating, right? But here’s the thing: sometimes it’s not about your startup—it’s about their spreadsheet.

Understanding how VC fund maths actually works can save you time, rejection, and a whole lot of energy chasing the wrong cheques.

💸 First, the Basics: VC Is a Hit-Driven Business

Most VCs don’t just want big returns—they need them. Why?

Because most of their investments will fail. The model assumes it.

To survive and raise their next fund, a VC needs to return at least 3x to their limited partners (LPs). That means:

• If they raise a $50M fund… they’re aiming to return $150M.

• Only 1–2 companies in their entire portfolio will likely do the heavy lifting.

• Every cheque they write needs the potential to return 20–50x.

So if they invest $1M in your startup, they need to believe you could return $20–50M back to their fund.

That’s the maths. Cold, but true.

🧠 What This Means for Founders

This is where a lot of great startups get passed on. Not because they aren’t good—but because they don’t fit the fund math.

You could be building a solid $100M business and still not be exciting enough for a fund that’s aiming for unicorns.

Let that sink in:

✅ “Too small” doesn't mean not ambitious.
✅ A pass is often a portfolio decision—not a reflection of your team, traction, or potential.
✅ Many founders waste time pitching investors who were never going to say yes.

🔍 How to Flip the Script

The best founders don’t just pitch—they qualify their investors. Here’s how:

• Know the fund size. A $20M fund and a $200M fund think very differently.

• Understand cheque size. A $1M investment needs to return $20–50M. Does that fit your growth plan?

• Map the maths to your trajectory. If you’re not targeting a unicorn outcome, don’t pitch VCs who need one.

• Don’t chase prestige. Fit beats fame, every time.

✅ What Smart Founders Are Doing

• Targeting funds that align with their market size and business model.

• Building strategic rounds with a mix of angels, family offices, and climate-aligned funds.

• Using platforms like Raaise to filter investors by fund size, stage, and mandate—so you’re not wasting time on misaligned conversations.

🤓 The Bottom Line

VCs aren’t evil, and they’re not wrong for passing on you. But you deserve to understand why.

It’s not personal. It’s not politics. It’s fund maths.

The sooner you internalise this, the sooner you’ll stop chasing the wrong capital—and start building aligned momentum.