Lost in translation— what do Investors actually mean?

Often, Entrepreneurs and Investors speak in different languages.

Investors never want to miss out on the next big thing, they will often comment on a business in a generic and non-confrontational style to keep the dialogue open and avoid ever missing out. This post is to help founders know what to look out for and when to dig a little deeper.

These quotes can be in meetings and follow up e-mails. I actually dug most of them out of my old e-mail exchanges with VCs and Angels.

“You’re too early.”

Considering this is venture capital, I’m not sure this comment does the entrepreneur justice. It’s just a way of avoiding saying “No” there and then. Much better would be — “You’re too early because of x, y, z” or “You need to prove x,y,z.” Investors owe entrepreneurs more feedback than this and entrepreneurs must probe on why they’re “too early”.

“Keep us updated.”

This is the ultimate stall from any investor. They invest in lines not dots, so this is usually the last comment at the end of a first meeting. Founders should respond by actually doing this and maybe invest some time into a monthly newsletter/update. Some probing on what the investor would like to be updated on specifically is also helpful too.

“Keep us in the loop.”

The loop is one of my favourites. I’m not actually sure what the loop is, but VCs in particular seem to want to be there. This is such a generic, non-committal comment that the founders ears should prick up at such a lack of enthusiasm.

“Let us know when you’ve got a few term sheets on the table”

I really dislike this one. If this is from a VC it means that they are unwilling to commit to the deal, but if another smart person does, then they might reconsider.

“Come back to us if you find a lead”

Hate hate hate (unless the model is quite clearly one where they match fund and syndicate from the outset.) This is the same as above. The investor doesn’t have the confidence to back the company, so is looking for their investment to be de-risked (Or, piggy back off others hard work, depending on how you look at it.)

“Circle back in 6 months”

Maybe it is best to take this one quite literally; “Start again and come and see us in 6 months when you’re working on something completely different.”

“We’re in between funds”

I’m not saying this is a lie, but it’s a fairly useless comment that gives no value to the entrepreneur. It’s highly unlikely that being “in-between funds” is ever a reason not to invest. Therefore this is usually another way to avoid giving brutally honest feedback.

“I’ve got no cash left”

This is one from the angels out there. In my experience most angels can usually find cash down the back of the sofa if they really want to. They shouldn’t be taking founders time if they knew they were out of cash (unless stated beforehand.) So again — 90% of the time, I’d see this one as a way of shirking giving the real reason to not invest.

“We’re stacked (or slammed) due to completing on another deal”

Completing a fundraising round does take a long long time and can be painful but I refuse to believe it renders investors incapable for a call or a meeting. Clearly, the startups website, pitch deck; or the founders Linkedin hasn’t done enough to spark the investors interest.

“Let’s touch base in the new year (or one of the quarters)”

Loops, circles and bases. Raising money can be like a game of rounders (baseball). Same as many others; a generic, off the wall comment that pretty much means nothing.

“We only invest in Series A”

Again, this might be true but it’s no real use to the founder as a standalone comment. More detail on milestones that might need to be hit to get to that position is much more helpful and this information should be coaxed out of the VC by the CEO.

“Unsure on the size of this opportunity”

I’ve often found that this comment, or similar, are a signal that the founder hasn’t communicated their vision, product or market very well. It’s a bit of a broad-brush statement which needs investigating to find out what the investor really doesn’t understand about the market or product.

“What’s your timings? We can move fast”

I have known this to be followed by a complete lack of communication afterwards. If an investor has to openly state that they are fast movers, then I’d be skeptical as it’s not really something to be proud of, everyone should be at the same speed really. This is the biggest buying signal of the lot, so maybe the founder should ask them to print off their standard term sheet there and then?