Why investors pass on food biotech companies

Opinion by Dr. Adam M. Adamek. First published on Substack on 5 May 2026. Revised for republication on 16 October 2026. Scenarios and quoted dialogue in illustrative examples are fictional, not documented client outcomes.

An illustrative scene. It is late on a Tuesday. A founder reads an investor’s rejection email for the third time. The team has spent weeks on the conversation and still cannot tell which question stopped the deal.

Imagine a food biotech team seeking a Series A round. It has a production strain tested at pilot scale, a proposed manufacturing partner and an expression of interest from a buyer. The evidence sounds promising. It does not answer every investment question.

The email is four sentences long.

Thank you for the conversations over the past three months. The team is impressive and the technology is promising. After internal discussion, we have decided this is not quite the right fit for our thesis at this stage.

We will be watching with interest and would welcome a reconnection in 6 months.

You read it a fourth time. You scroll up to confirm the partner’s name. You read the sentence about not quite the right fit twice more.

You are no closer to knowing why.

That is the moment this issue is about.

The assumption to challenge

The mistake is expecting a short rejection email to provide a complete diagnosis.

A polite rejection may tell you very little about the underlying discussion. Treat the seven categories below as prompts for investigation, not as a validated decoder of another person’s motives.

A short rejection may be written to close a conversation politely. Read it alongside the diligence record, while leaving room for reasons you cannot observe.

A rejection can preserve a relationship while giving little detail. Its language may be deliberately broad. That makes it a weak source for drawing a confident conclusion about the decision.

An investor may be managing timing, internal disagreement, confidentiality or a genuine mismatch. The wording alone cannot tell you which.

Compare the email with the questions asked during diligence. Where possible, ask the investor directly what would have needed to be different. An inference is a starting point for that conversation, not its conclusion.

Here are seven questions to test against the evidence you actually have. Each uses a familiar rejection phrase as a starting point. The phrases are not a reliable code for the investor’s private reasoning.

One-minute brief

If you read no further, take this with you.

Step one. Review your last five conversations, including the rejection emails and meeting notes. Look for questions that recur. Separate what the investor explicitly said from your interpretation.

Step two. Compare those questions with the seven categories below. More than one may apply. Some refusals will not fit the list. Each category includes an initial check, not a guaranteed low-cost fix.

Step three. Look for a repeated unresolved question. Prioritise the check that could change your next decision. Different funds can decline the same business for different reasons, so disagreement does not prove that you misread the evidence.

Use this as a structured review of your own evidence. It cannot reconstruct a private investment committee discussion.

Question 1. We are at capacity right now

A possibility to test: does the category still fit the fund’s current mandate?

One possible concern is category fit. Test it against the fund’s mandate and recent activity rather than treating a polite sentence as a confession.

Capacity can be the real reason. It may mean available capital, partner bandwidth, portfolio concentration or investment period constraints. A long process followed by a capacity explanation is a reason to ask for clarity, not proof that the fund secretly rejects the category.

Three questions to investigate:

1. Is the fund deploying the announced vehicle, and does that vehicle cover your category and stage?
2. What recent investments has it publicly announced, and what might be missing from that record?
3. Does the stated mandate include comparable businesses, even if the portfolio page shows none?

The first check. Review the fund’s public investment announcements and stated mandate. Ask whether it is currently leading new investments in your category and stage. Public deal lists can be incomplete or lag the decision date.

A capacity explanation calls for a mandate and timing check. It does not reveal a hidden motive on its own.

Question 2. This is too early for our stage

A possibility to test: is the evidence strong enough for the investment being requested?

Sometimes the stage mismatch is exactly what the investor says it is. Sometimes the cheque requires stronger evidence than the company has yet produced. Ask what evidence would make the stage appropriate.

A deck can invite the investor to extrapolate beyond the evidence. The useful test is whether the three claims carrying the investment case have adequate technical, commercial and regulatory support. Counting documents does not measure that support.

Three questions to investigate:

1. Which evidence does this fund expect at the stage you are proposing?
2. Which material claims still rely on internal evidence alone?
3. Can a reviewer trace the key assumptions to data, dates and named owners?

The first check. Ask an appropriately qualified independent reviewer to challenge the three weakest claims. Agree the scope, conflicts, deliverable and fee in advance. A short expert review cannot replace experiments, regulatory advice or engineering work that the claim actually needs.

Ask which piece of evidence would change the stage assessment.

Question 3. We need to see more traction

A possibility to test: what is missing between a pilot and a buying decision?

A pilot and a buying decision are different forms of commercial evidence. A pilot may demonstrate technical performance or customer interest without establishing an approved budget, agreed specification or procurement route. Define the evidence behind your own use of the word traction.

The related essay Corporate pilot purgatory examines the functions between a trial and a purchase order.

Map the route from trial to purchase. Procurement involvement, quality requirements and a named budget owner are useful checks where those functions govern the decision. Their absence does not prove that a pilot is worthless; it identifies a conversion assumption you should investigate.

Three questions to investigate:

1. Who controls the procurement process, if one is required?
2. What quality and specification approvals must precede a purchase?
3. Who owns the budget, and what buying decision has actually been made?

The first check. Map procurement, quality, operations, finance and legal for each active pilot. Record the decision owner and next agreed action. Use that route in the next conversation instead of describing a pilot as a completed sale.

More traction may mean a clearer route from trial to an authorised buying decision. Ask which commercial evidence is missing.

Question 4. It is not quite a fit for our thesis

A possibility to test: could another partner explain and defend the investment case?

A warm first meeting does not guarantee agreement among the partners. If the conversation changed after a particular question, revisit that question. You still do not know the private reason for the pass unless it is explained.

Time spent viewing a pitch deck is not the duration of an investment committee meeting. Do not confuse those measurements. Test whether another person can accurately explain the core argument after reading the deck.

Three questions to investigate:

1. What changed between the associate’s questions and the partner’s questions?
2. Was a postponement explained, or are you inferring its significance?
3. Which structural question remained unanswered at the end of the conversation?

The first check. Ask an independent, experienced reviewer to challenge the argument and identify the assumptions they cannot defend. Agree any compensation and conflicts explicitly.

A thesis mismatch can be real. A clear argument helps you discover it earlier.

Question 5. Let us reconnect in 6 months

A possibility to test: is there a specific milestone that would justify reconnecting?

A reconnection invitation is useful when it names evidence that would warrant another conversation. Without that detail, it may be a courtesy rather than an intention to invest.

Do not decode three, six or twelve months as fixed signals. Ask which milestone matters, who will review it and whether the fund expects to be investing at that time.

Three questions to investigate:

1. Did the investor identify a technical or commercial question that remains unresolved?
2. What evidence would demonstrate the claimed advantage over competing approaches?
3. Can you agree which evidence would make a follow-up worthwhile?

The first check. Send a concise summary of the unresolved question and the evidence you propose to obtain. Ask whether it addresses the concern. Set the timetable from the work required, not from the phrasing of the rejection.

Make a reconnection concrete: one question, one evidence milestone and a reason to talk again.

Question 6. We are going to pass for now

A possibility to test: did diligence leave an unresolved governance question?

Suppose, as a hypothetical example, that a rejection arrives shortly after a reference call. The timing may attract your attention. It is not enough to establish what happened in that call or why the fund declined.

A pass after a reference call does not establish that the reference caused it. Revisit ownership, vesting, founder responsibilities and documented disputes as ordinary diligence preparation. There is no verified sector statistic here establishing why such passes happen.

Three questions to investigate:

1. What did the investor explicitly ask about team responsibilities or ownership?
2. Are ownership, vesting and advisory arrangements accurately documented?
3. Are there unresolved factual discrepancies to clarify with counsel or the people involved?

The first check. Ask qualified corporate counsel to review ownership and governance issues relevant to the proposed round. Use an agreed scope and quotation. Do not infer a problem with a named person merely from the timing of a rejection.

Reference-call timing is a prompt to review the facts, not evidence of wrongdoing or a defective team.

Question 7. Great founders, just not for us

A possibility to test: are the production-cost assumptions adequately supported?

Repeated questions about production economics may identify an unresolved concern. They do not establish what every investor thinks or how common that concern is across the sector.

Review the questions about cost of goods, the industrial team and contract manufacturing. If those questions remained unresolved, they are worth addressing even when the fund’s reason for declining remains unknown.

Three questions to investigate:

1. Which cost assumptions were challenged, and what evidence supports each one?
2. Who is responsible for the industrial plan, and what relevant operating experience do they bring?
3. Are contract development and manufacturing organisation (CDMO) costs based on a current scoped quotation or an untested estimate?

The first check. Commission a scoped review from an independent process engineer when the decision warrants it. Clarify which assumptions can be checked at a desk and which require production data. Cost depends on scope, access and the work required.

If costs dominated the discussion, make the assumptions and supporting batch data easier to inspect.

How to review your last five conversations

Print the seven questions and review a manageable set of recent conversations. Five is a practical starting point for this exercise, not a statistically meaningful sample. Keep the emails beside your meeting notes and record the exact wording of material questions.

Re-read the last five conversations. Look for a question you can investigate, not a code you can claim to have cracked.

Illustrative exercise: suppose six of eight conversations repeatedly questioned production costs. A scoped engineering review could help identify the assumptions worth testing next. It would not guarantee a funding round. This is a decision exercise, not a documented fundraising result.

The pattern can help prioritise the next evidence-gathering step.

What to do tomorrow morning

For founders raising right now: review the recurring questions, then choose the check that could change the next decision. Fund fit, timing and company evidence can all matter. Do not treat frequency in a small set of conversations as proof of one root cause.

A useful follow-up can refer to the specific question the investor raised, explain what evidence has changed and make a clear request. It may not receive a response.

For technical co-founders: review the questions with the CEO. If the reasons differ or remain unclear, record that uncertainty. Do not force the conversations into one explanation.

The exercise gives the technical and commercial leads a shared record to examine.

For investors: look at which polite phrasing you have been using as a soft pass. If you have written let us reconnect in 6 months to three founders this quarter and you cannot articulate which specific risk each one needs to retire, you are using the phrase as choreography, not feedback. Write one honest sentence instead.

The founders you owe a real reply to know who they are.

Three diagnostic questions

1. Which questions recur across your recent conversations, and which reasons remain unknown?
2. What is the smallest credible test that could change your next decision?
3. Who can challenge your interpretation independently, with relevant experience and clear conflicts?

Use the answers to make the next meeting more specific: what has changed, what remains uncertain and what decision is being requested?

What this framework can and cannot tell you

It can organise the questions that arose during diligence. It cannot reveal an investor’s private motives, prove why a reference mattered, or forecast whether the next round will close. Keep a column for direct feedback and a separate column for hypotheses to test.

This is an editorial framework, not a validated investor survey or a statistical prediction. No population, response rate, rejection distribution or funding outcome is claimed. References to five or eight conversations are practical or illustrative examples, not a dataset.

Explore related FoodEdge reports, or contact the editor with a question about the assumptions.