"No" is a two letter word
For me, the matter is pretty simple: if they're not calling, they're not interested. If they are not sending you a term sheet, they're not interested. Does it really matter how they tell you? I often ask my clients. You have a business to run and money to raise. Don't waste the pretty on someone who doesn't appreciate you.
Still, many gnash their teeth. They need clarity. They want closure. (Is this an episode of Sex and The City?). Here's my working theory on why this is such a sore subject: VCs and entrepreneurs speak two different languages.
On the one hand, entrepreneurs are consummate salespeople. And in sales speak, silence is never an option. When a customer says "No," a salesman hears "Maybe." When a customer says "F@!k Off!", a salesman hears "Maybe Next Quarter." For them, the art of the no is fundamental to business.
By contrast, VCs speak the language of financial romance and behave accordingly. VCs may not want to take things to the next step, but they will want to preserve you as a future option (in case the bar closes down that night without anyone prettier walking in). Mixed signals are the natural language of investing.
Given the context, it's a reasonable way to communicate. Think of the last girl you decided not to call after the first date. Did you tell her you'd had enough while you were both still eating? Did you recommend her to other buddies, in case they might find her more appealing? Of course not.
Entrepreneurs: Don't expect more from the men you are trying to date (financially speaking) than you would do if the situation was reversed. If a VC tells you that they have no bandwidth for your investment, it's not a cop out. Let him who has not said "It's not you, it's me" cast the first stone (J'accuse, Paul Kedrosky!)