We very much liked this candidate's work, but felt his level wasn't yet at the level at which he'd pitched himself. I was very open about this with him, but also said that I didn't want to insult him with a low offer. In order to keep options open he offered to start with an initial contract, potentially leading to a perm position. However upon reviewing our needs we decided not to take up this option so never actually made him an offer. I meant to call him up to advise him of our decision, but, as so often happens in life, got distracted by those things that crop up when running a startup - which is a shame because he had shown professionalism with us and deserved better back from us. But it is something we will learn from and try not to repeat again. I am sure that he will be successful and wish him the very best for the future.