Do VCs need to explain why they passed on a deal?
No, they don’t – and I’m saying this as a founder.
VC is a “default no” game. They’re not in charity. They pass on most deals by default and only invest in small # of companies they can be excited for the next 10 years, for whatever subjective reasons.
If it’s a default yes game, sure, the expectation might be that VCs explain why they had to pass on such a great company, for each individual case. But it’s not a default yes game.
Founders often send a follow up email to ask why a VC passed on them. Great effort to get as much feedback as possible and use every interaction as a learning opportunity. But if it goes beyond this and becomes some sort of a demand, the founder is getting into the entitlement territory, IMO.
The other caveat is, when pushed, VCs might give false answers. They might have passed on you because they think you’re a weak founder, or because they didn’t like the fact that the founding team was all East Asians – but most VCs wouldn’t say that out loud.
So if a VC passed on you, don’t get hung up on the why too much. It might be whatever reason for each VC, but that’s not the point. The goal is not to fit their standard, the goal is to build irrefutable success and become the one company the next VC has been desperately looking for.