I don't think this is really specific to VCs -- it's just usual social stuff. You don't tend to tell people you think they suck to their faces. I wouldn't call that dishonestly so much as, well, just normal human interaction. You wouldn't tell a job applicant, "Sorry, but we just don't think you're very good at what you do."
This is compounded by the relative oddity of the venture capital business. You're basically asking people you don't know to trust you to a pretty amazing extent and to drop more money on you than most people make in a decade or two. Imagine how jittery you'd be screening job applicants if you had to pay 20 years salary in advance. And imagine that there was also a steady stream of application coming for that same job -- so many in fact that you couldn't even really look at all of them. That's kind of the mental image I use for the VC evaluation process.
Edit: One amusing postscript to that -- the second job I interviewed for after college they didn't think I was good enough for. I didn't let it put me off too much and eventually became good friends with the guy that didn't hire me. I could easily have gotten that job later if I'd wanted it. I suspect it's not too different with VCs. A rejection isn't a rejection until the end of time; it's their snap assessment and they'll miss sometimes.
This is compounded by the relative oddity of the venture capital business. You're basically asking people you don't know to trust you to a pretty amazing extent and to drop more money on you than most people make in a decade or two. Imagine how jittery you'd be screening job applicants if you had to pay 20 years salary in advance. And imagine that there was also a steady stream of application coming for that same job -- so many in fact that you couldn't even really look at all of them. That's kind of the mental image I use for the VC evaluation process.
Edit: One amusing postscript to that -- the second job I interviewed for after college they didn't think I was good enough for. I didn't let it put me off too much and eventually became good friends with the guy that didn't hire me. I could easily have gotten that job later if I'd wanted it. I suspect it's not too different with VCs. A rejection isn't a rejection until the end of time; it's their snap assessment and they'll miss sometimes.