TRC 041: The founder's translation guide to VC speak

Read time: 5 minutes

Raising money as a start-up founder is nearly always a humbling experience.

10 meetings with investors can easily produce 8 pieces of conflicting advice.

You get used to hearing all of the reasons why your beloved idea won’t work.

Navigating the process as a first time founder can be particularly confusing.

I talk to founders often who have spoken to VC firms and come away encouraged by what they have have heard.

But it’s important to know that in venture, what people say is not necessarily exactly what they mean.

Here is our quick guide to decipher the hidden meaning in common phrases used by venture investors:

1. "We love your business, just come back when you have more traction."

Translation: Your idea is interesting, but we don’t believe you can execute it at scale yet. We don't want to invest until you've proven that there's significant demand or momentum behind your product. We don’t want to say no directly in case you turn into a rocket ship.

2. "This is really interesting, but it's a bit early for us."

Translation: We don't think your business is developed enough to be a safe bet. We prefer to invest in companies that are further along or have de-risked the opportunity to a greater extent. This one has become more common recently.

3. "Keep us updated on your progress."

Translation: We’re not ready to invest right now, but we want to keep an eye on your progress in case things change. It’s also possible we’re just being polite.

4. "Who else is on the cap table?"

Translation: We aren’t that interested but could become interested if somebody we respect or want to do more investments with has already invested.

5. "Have you considered exploring [X] as a potential market?"

Translation: We think your current market focus might not be lucrative or large enough, and we believe you might be missing out on a more promising opportunity. We’re also testing how adaptable and open you are to pivoting.

6. "We're very excited about your space."

Translation: We think the industry you're targeting has potential, but we're probably also talking to other startups in the same area. Our excitement is more about the market than your specific company. We could also be interested in gathering more information on a potential competitor for another business we are more interested in than you.

7. "Let's circle back in a few months."

Translation: We're not ready to invest right now, and we might never be. If you make significant progress, we might reconsider, but don’t count on it.

8. "I’m afraid this doesn’t fit our investment thesis"

Translation: Even though we probably do deals that only lightly fit our thesis when we are super excited about the founder or business, unfortunately this doesn’t apply to you. Can also be true of course, but this is less likely if they are saying this after a meeting - why meet you otherwise?

9. "Can you send us more information on [specific topic]?"

Translation: We have doubts about a particular aspect of your business and want to dive deeper into it. Alternatively, we might be procrastinating, trying to delay making a decision.

Great investors will always give very specific feedback about why you aren’t right for them as an investment.

They understand what it is like as a founder, and they want you to be able to move on quickly so you can find the right investors.

They will want to give you as much helpful feedback as possible.

If you find that the feedback is vague, despite having had a good meeting, it’s most likely a ‘no’ in a less direct form.

And probably a good sign that they wouldn’t have been the right investor for you anyway.

Whenever you're ready...

There are three ways we can help you:

1. Join the Founder Coaching Club. 

1:1 coaching and an exclusive community for early stage founders.

Limited to 20 founders. 

Sign up here.

What other founders say about their sessions:

'Marcus’s expertise is unparalleled'
'Marcus has been an absolute game-changer for my start-up.'
'So many people offer up such sessions, but few can pull it off like this.'

2. Understand your level of investment readiness with our comprehensive pitch deck review.

3. Get free actionable advice in your inbox every fortnight.