“Yes” means “no”: The language of VCs


Have you ever received a “no” from a venture capitalist (VC) that left you questioning what they really meant? Well, you’re not alone. VCs have a secret language called VCspeak, where their words often carry a different meaning. In this article, we delve into the intricacies of VCspeak and uncover the hidden messages behind their seemingly straightforward responses.

The Art of Saying “No”

One of the most interesting aspects of VCspeak is the myriad of ways VCs communicate a rejection without explicitly saying “no.” In fact, it is believed that VCs have over 400 words for “no.” This is done strategically, as VCs never want to close the door completely in case circumstances change. They want to keep their options open and maintain a relationship with the founder.

However, not all VCs follow this pattern. Top-tier VCs, such as Sequoia, Benchmark, and Kleiner, are known for their straightforwardness. They will tell you “no” and provide clear reasons for their decision. They have no interest in wasting your time or theirs. In contrast, smaller funds, inexperienced family offices, and junior associates may string you along, lacking the authority or funds to make a commitment.

Decoding VCspeak

So, what do VCs really mean when they say certain things? Let’s decode a few common phrases:

  • “Talk to us again when you have traction”: This often means they want to see significant user growth or market validation before they consider investing. Traction is a key indicator that the startup has potential.

  • “We think you’re too early for us”: This suggests that they believe the startup is still in the early stages of development and needs more time to mature. They may not see the market opportunity yet or have doubts about the management team.

  • “We’re passing for now, but keep us updated”: This is a polite way of saying “no” for the moment, but it also leaves room for future opportunities. They want to stay informed about the startup’s progress and potentially reconsider in the future.

The True Reasons for Rejection

While VCs may not always disclose the true reasons for rejecting a startup, it often boils down to their belief in the management team or the market opportunity. They want to invest in founders they trust and markets with high growth potential. It’s important for founders to understand that a rejection does not necessarily mean their idea is flawed or unworthy. VCs have their own investment thesis and criteria that guide their decisions.

The Author’s Personal Experience

The author shares their personal experiences of rejection from VCs for their startups Fixr and Carbn. They highlight the challenges of securing VC funding without strong user growth and emphasize the importance of validating the market. While VCs may be hesitant to invest in early-stage startups, seeking angel investors or other alternative sources of funding can be a viable option.

Seeking Wisdom and Sharing Experiences

The article invites readers to share their own experiences and wisdom in the comments. It acknowledges that the VC landscape can be complex and nuanced, and hearing different perspectives can provide valuable insights to founders navigating the funding process. Whether it’s deciphering VCspeak or understanding the motivations behind VC decisions, the collective wisdom of the community can be instrumental in building successful startups.

In conclusion, the language of VCs is not always what it seems. VCs use various tactics to convey a rejection without shutting the door completely. However, top-tier VCs are known for their directness and transparency. Understanding VCspeak and decoding their true intentions can help founders navigate the funding process more effectively. Remember, a “no” from a VC doesn’t define the worth of your startup. Seek feedback, self-criticism, and alternative funding options to fuel your entrepreneurial journey.

Source: https://jacobbartlett.substack.com/p/yes-actually-means-no-the-curious

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