I think it was Paul Graham who gave a good indicator if the VC was saying yes.
“Look down. Is there a term sheet in front of you?”
“Yes” means “no”: The language of VCs
131–140 of 217 posts
Re: “Yes” means “no”: The language of VCs
#132Earlier quoted context omitted.
Top tier VCs will definitely tell you “no” and they’ll often get there quickly. It’s more often the small funds, the inexperienced family offices, and the junior associates that don’t have authority who string companies along forever. They don’t have as much authority or funds to actually work with, so they have a lot of time to string you along. Lumping all VCs together really doesn’t lead to accurate descriptions o…
This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to…
Which actually reinforces the grandparent's point. Sequoia, Benchmark, Kleiner, etc. can say an actual "no" and you'll still go back to them because they're...Sequioa, Benchmark, etc. You'll go back to them, because its a huge signal to prospective buyers, potential acquirers, partners, etc. that you're being funded by a top tier VC.
> Good VCs are professionals and have no interest in wasting your time or theirs.
"Good" VCs has less to do about professionalism and more to do about pedigree. Professionalism and "good"/"bad" VCs are not mutually exclusive things.
Re: “Yes” means “no”: The language of VCs
#133Earlier quoted context omitted.
If its a fund that has led rounds before then yes, but if its a new fund or small fund then it might be part of the GPs proving they can get deal flow to their LPs before raising a larger fund
I mean, maybe, but (a) I've been told many times that it's code, and it's like a running joke in the industry, and (b) if you have a lead, you're not worried about reading tea leaves anymore. Saying "we'll invest if you have a lead" is like saying "we'll invest if you put a successful round together". Who wouldn't? The point at which you have a lead for your round is often the point where you start turning them down.
This has been my experience as well. There is certainly a herd/FOMO mentality there, when you have a term sheet from a lead investor you start getting cold called by other VC's who would "love to be part of this round".
Re: “Yes” means “no”: The language of VCs
#134Earlier quoted context omitted.
If its a fund that has led rounds before then yes, but if its a new fund or small fund then it might be part of the GPs proving they can get deal flow to their LPs before raising a larger fund
I mean, maybe, but (a) I've been told many times that it's code, and it's like a running joke in the industry, and (b) if you have a lead, you're not worried about reading tea leaves anymore. Saying "we'll invest if you have a lead" is like saying "we'll invest if you put a successful round together". Who wouldn't? The point at which you have a lead for your round is often the point where you start turning them down.
We’ve had VCs who have literally ran out of money before they could invest, even when w round came together. They end up investing in lots of crappy startups and convincing themselves it’s the best thing since sliced bread. A lot of smaller VC is just about networking your way into the bigger deals and syndicates while you raise money from LPs, rather than sourcing new diamonds in the rough. The startup “orbiters” are just there to show that you’re not a nobody, while you go to different events and try to get into in the same deal as the big boys.
Re: “Yes” means “no”: The language of VCs
#135Earlier quoted context omitted.
Because the SV VC business model isn't to build a traditional profitable business that beats the competition by providing a superior product/service for a competitive price. It is to dominate the competition by subsidizing the real cost to consumers, until you have taken over the market and can raise the price and lower the quality of the product/service. Edit: Or the business model is to be acquired by a FAANG who f…
Does that even work as an investment model? The poster child for this has got to be Uber, and they've shown that this is a lot harder to achieve than it appears. The huge wins have all been IPOs where the business is still growing/trying to dominate the market, and not where they're in that monetisation phase. At least that's what I've seen. I don't think there's a single case yet where the "dominate and then monopol…
Amazon?
Re: “Yes” means “no”: The language of VCs
#136They miss my favorite: "Yes, we'll invest we just don't want to be 'lead'." That is code for: "You aren't going to find anyone who shares your idea of what your valuation should be so we are safe telling you we'll invest if you find a 'lead investor' because that person doesn't exist." It gets funny/twisted when you do find a lead and go back and now there is some other goal post that is keeping them out of "this rou…
Not necessarily. It could also be code for "We can't write a check big enough to lead your round". E.g. a seed fund who writes $1m checks isn't going to lead a $5m round. The VC would be putting themselves out of a job if they wrote a $5m check when they told their LPs their fund target was $1m checks.
"We're in if you have a lead" is basically the starting point before you ever talk to a VC. Some other VC being willing to invest $5m is itself often considered a strong enough signal to invest some significantly smaller number than that while knowing literally nothing about the company being invested in. Even VCs which explicitly told you no may reconsider if you find a lead.
Re: “Yes” means “no”: The language of VCs
#137Earlier quoted context omitted.
This is the most accurate comment I've seen here. Sequoia, Benchmark, Kleiner, etc. will all tell you "no" and why with minimal turnaround time. The same is true for second-tier players like Craft, smaller shops started by breakaways from the big firms, and scouts. Good VCs are professionals and have no interest in wasting your time or theirs. A "no" now never precludes future participation anyway; they don't need to…
Which actually reinforces the grandparent's point. Sequoia, Benchmark, Kleiner, etc. can say an actual "no" and you'll still go back to them because they're...Sequioa, Benchmark, etc. You'll go back to them, because its a huge signal to prospective buyers, potential acquirers, partners, etc. that you're being funded by a top tier VC. > Good VCs are professionals and have no interest in wasting your time or theirs. "G…
The grandparent said "VC's never actually say no". I did the opposite of reinforce that. Every good VC will give you a version of the following if it's a "no":
1. It's a "no". (Clear, unambiguous.)
2. Here's why. (E.g. not believing in the space, issues with customer background or another part of due diligence.)
3. We make mistakes all the time and hope you prove us wrong. (I've pitched the partner at Sequoia who invested in FTX. His name's Alfred, super nice guy and fully aware that screwing up is part of his job. "No" isn't a value judgment.)
4. Happy to talk again for the next round. (If they're a multistage fund, e.g. you won't hear this from First Round.)
It's all very predictable. The one real "why" you won't typically hear back on is strength of the founding team. They won't tell you when they think you're the problem. But product, space, GTM, basically anything else they're happy to dissect.
This is true for all of the firms that people have heard of. Of course there's a long tail of bad VCs, too, generally podunk firms few people ever encounter anyway. Avoid TechOperators out of Atlanta, for example.
Re: “Yes” means “no”: The language of VCs
#138Maybe it's my business major background and my skepticism of all these tech companies that have no reasonable business model to make $'s, but unless there is an obvious need for investment like buying a large amount of real estate or machinery, why would you need VC money to build an app after you've already spent several months doing it? It should run on it's own and not need investor money. You shouldn't be focused…
A lot of venture backed companies aren't just building an "app". Spend some time looking through the portfolios of major VC firms, especially in life sciences and medical devices.
Yeah maybe handful of them. That too are also mostly lunatic ideas with little grounding in solid serious rigorous academic and scientific research with no feasible functioning product in sight or something financially viable on the horizon. It's not that they already have a research outcome that they need to "productize" with manufacturing and distribution channels.
Things like Neura Link, Carbon capture, fusion and such.
Most or close to 98% are just building an "app" or an app with a website such as yelp but for dogs, dogs but for cats or other tools that other founders should buy such as sales and leads management etc etc.
Mostly - meaningless.
Re: “Yes” means “no”: The language of VCs
#139Earlier quoted context omitted.
Because the SV VC business model isn't to build a traditional profitable business that beats the competition by providing a superior product/service for a competitive price. It is to dominate the competition by subsidizing the real cost to consumers, until you have taken over the market and can raise the price and lower the quality of the product/service. Edit: Or the business model is to be acquired by a FAANG who f…
Does that even work as an investment model? The poster child for this has got to be Uber, and they've shown that this is a lot harder to achieve than it appears. The huge wins have all been IPOs where the business is still growing/trying to dominate the market, and not where they're in that monetisation phase. At least that's what I've seen. I don't think there's a single case yet where the "dominate and then monopol…
Facebook and Youtube might qualify here
Re: “Yes” means “no”: The language of VCs
#140Regardless of yes or no, VC money is ludicrously expensive.
125k is barely one year's salary and your 7% of ownership gone forever and that's the deal for almost all accelerators.
On top of that - the connections, reach, prestige might be meaningless or irrelevant to your particular product and market.