The number of times I’ve heard founders tell me something like…
“but they SAID they were interested!!”
“I did exactly what they asked and they still didn’t invest!!”
… is painfully large.
It’s frustrating for all parties involved and I wish founders had one of those Star Trek translator devices when it comes to all things VCs
Here’s a quick insight: while communicating with VCs often feels like you’re navigating a minefield of vague and guarded language, it isn't because they’re being malicious on purpose. Instead, most of this is due to their limited time and the numerous competing priorities they juggle. Balancing their reputation, investment opportunities, workload, and founder feelings can make their comms seem cryptic at times, especially when email as a form of communication already leaves a lot of room for misinterpretation.
While I don’t have a magical translator for you, I do think walking through a few translations and their backstories might help you understand more of the language VCs use with you.
Here are the 9 most common lines you’ll find in VC emails and what they actually mean.
This is a vague way of passing on an opportunity without providing concrete reasons. Despite the lack of clarity, you can glean a couple of things from this response.
First, assuming there isn’t some industry / geography / specific category exclusion, your takeaway should be they just weren’t excited enough to spend more time with it. This could be a reflection of the emails that were sent, the way the story was told, or maybe just a lack of heat and awareness around the deal.
Keep in mind that while this can be discouraging, it doesn't necessarily close the door on future interactions.
This is a very specific question that VCs ask when they aren’t sure what stage your company is in and how much progress you’ve made. They want to know how far along you are and match what their expectations for the company should be. They want to determine what valuation your company will raise at, which is something a VC can do with these two data points.
If you haven't raised anything yet, even a little traction could be appealing. However, if you've already raised millions, the VC will expect either 1) substantial traction relative to the funds raised or 2) a compelling explanation of where your company stands in its lifecycle, particularly if the traction doesn't match the amount raised.
As for “How much are you raising now?”, the VC can usually back into a valuation if a founder says something like “Well, we expect people to dilute somewhere around 20%.” That will give the VC a sense for whether or not this is a deal they want to do and if it's a valuation range that they are comfortable with.
My advice is to 1) be prepared to assuage their concerns around how much traction you have relative to how much you’ve raised and 2) be ready to have a conversation about valuation. Describing a range makes sense- I like budgeting a certain number and then saying “A lot of people want us to raise more.” That can open up a conversation with the investor, which also creates a big range for the end valuation.
This is an attempt to suss out a signal from whether someone who could invest is actually investing or planning to. This might be the person who intro’d you or someone you mentioned in your pitch. The VC is wondering, “If someone that's credible that invests in the space could invest, why aren't they investing?… If they're not investing, then why should I invest?”
Don’t panic. There are legitimate reasons for other investors not to invest, and giving a solid explanation can help address their concerns. Some examples of good answers include:
When a VC asks this, they’re looking for an affirmative “Yes, they are investing” or a reasonable explanation why they’re not. Be prepared to address this question with a clear and convincing response to maintain the VC's interest and confidence in your company.
This is one of the most lampooned phrases for a reason. Although it may seem like a positive and supportive statement, it's often used as a means to protect or maintain a VC's reputation for being helpful without actually offering any specific assistance or follow-up. In essence, it's a throwaway line that many VCs hope founders won't take them up on, as they're trying to score points for appearing helpful without truly committing to help.
For founders who are already part of a VC's portfolio, getting this line means your company probably isn't a top priority for the investor. They’re not actively trying to win your favor, but rather looking to maintain their reputation. If a founder hasn't yet secured an investment from the VC, this phrase signals that the investor is just not that into you. If they’re going to offer this though, you might as well try to squeeze some value out of this: How VCs are like Gift Card Businesses
When a VC genuinely wants to help a founder, they'll dig deeper and offer more specific support so that out of reciprocity, they will let the investor invest in this round or the next.
Offers to help in a specific way are a stark contrast to the vague “Let me know how I can help” line. If you get something like this, it is a specific indication that an investor wants to pocket some reciprocity chips with you. Helping usually takes some effort. Even if it’s just thinking about how to help, that is effort that investors don’t expend haphazardly. This is especially relevant for solo GPs smaller funds who don’t have operations support teams like A16Z.
They are investing their very limited time to try to curry favor for you so if you get this, make a note of what the investor is telling you… and accept their offer to help. Might as well get this value even if you don’t end up working with them!
The small insight you can take from this line is that whatever company description you used or introduction that was made was not as strong as it could have been.
The fact is, many investors will say they’ll take a meeting BEFORE they get materials. Some agree to a meeting and then ask for materials and some don’t even ask for materials at all when it’s a a great connection.
This insight might be unactionable in most situations, but at least it gives you some data. Your company description could be improved, your story could be more convincing, or the connector’s relationship with the investor is not that respected.
Barf. I hated this one even before it became a cliché pass note. Reading between the lines, this means “I hope if you guys take off, I can still sneak into the deal because you’ll remember I said I was rooting for you.”
The reality is that they’re too much of a wuss to commit to the deal right now!
This is one of the most famous pass lines. I often describe “You’re too early” as the easiest pass or the most misleading pass ever.
Unless the investor you’re talking exclusively focuses on a different stage of investments, they have likely invested in companies with similar traction to yours in the past. The true meaning behind "you're too early" is that the investor simply wasn't excited enough by your pitch or company. You did not do enough to make them excited, either in the story you told or the momentum that you were generating in the fundraise or the scarcity that you applied throughout your interactions.
VCs often use investment theses as a convenient rationale to pass on deals they're not interested in pursuing. Almost every firm will do a great deal as long as it lightly fits their mandate. Without an investment thesis, investors might feel trapped and need to find more polite reasons to pass on companies they don't want to invest in. With an investment thesis in place, they can easily justify their decision, saying something like, "Sorry, right now we're investing in our 'The world is a game' thesis. Your company doesn't fit that thesis. But keep us updated!"
However, investors can often find ways to fit almost any company into their investment thesis. While this is a generalization, investment theses are not only incredibly broad, but they also change frequently as firms update and modify their strategies. Exceptions exist for firms with a very specific technical theses that they rarely deviate from.
Ultimately, the "Unfortunately, this doesn't fit our investment thesis" response can be categorized similarly to the "You're too early" line. The underlying message is that the investor simply wasn't excited enough by your pitch or company, rather than a strict adherence to their investment thesis.
This was the goal. To matrix-style upload a fluent understanding of VC Speak. I might not have gotten all the way there, but I hope this uncovered some of the underpinnings to their guarded language.
Let me know if you have any other specific phrases you want me to translate in a future essay.