Today’s Question: What do investors mean when they say...?
In the early days of pitching VCs, it is hard to tell how your pitch is being received and easy to waste time on people who won’t invest. Are you really 'too early'? Are they just not interested? Here are some common investor replies and what they mean, decoded by VCs and founders.
Quick Summary Answer
- VCs are incentivized to keep the relationship with you open, in case circumstances change and your startup takes off later. As a result, they give lots of ambiguous soft no’s.
- Most responses that aren’t suggesting a follow-up meeting or committing money are “No’s.”
- Common soft No’s include “would love to keep in touch,” “you’re too early,”
- One good way to get a clearer answer is to save 5-mins at the end of your pitch to ask: “What do you think?”
Common Replies and What Investors Mean
Lucky for me, a bunch of blog posts by VCs and founders have example phrases VCs say and their honest translations. I pulled together a list of common investor responses (and suggestions for what they might mean) from these 5 sources:
Probably means ‘No’:
- “Thank you for spending time with me the other day. While I am impressed by your vision, I don’t think that your startup is a good fit for my investment thesis at the moment. I wish you luck as you build your company.” [1]
- This is a clear “No.” Thank goodness.
- “I think what you are working on is amazing. Please keep me posted, I’d love to support you.” [1]
- Notice that this isn’t a concrete next step towards investment.
- “You are really onto something. I’d love to invest - ping me when you get a lead investor.” [1]
- If it were me, I’d take this as “likely no,” but follow-up after a lead investor in case.
- “[crickets]” [1]
- “[doesn’t suggest next steps at the end of the meeting]” [2]
- Founder/investor Elad Gil observes: “A VC who is interested in your company will usually define specific next steps at the end of the meeting. E.g., “Why don’t I get you together with 2-3 of my other partners later this week?” or “I will follow up with you quickly by Wednesday and we can discuss the data I need and next steps.”
- "We should definitely keep in touch on this - I love you guys and your model" [2]
- Might mean: “This is a no, even though it sounds sort of like a yes. Vague, positive-sounding generalities from VCs are almost always nos.”
- “[If you are passed on to an associate and never hear from a partner again after meeting with the associate, the VC just isn't that into you.]” [2]
- “Let me noodle on this a bit and get back to you” [3]
- Might mean: “I’m going to say no, but don’t want to do it in person.”
- “Hmm…Let me talk to my partners about it” [3]
- Might mean: “I’m going to say no and blame my partners”
- Sometimes this is real, and they do need to talk to their partners. But it’s also an easy way to say “no” later via email. Look for visible excitement to see if they’re really interested and planning to advocate for you with their team.
- “Let me introduce you to [person] at another portfolio company to get their take” [3]
- Might mean: “I’m trending no, but want to be sure I’m not missing something first”
- “…you are still a little early…” [4]
- Might mean: “You haven’t done much beyond build an MVP, talk to some customers and build a beautiful pitch deck. Which means pretty much nothing, because you haven’t done anything that reduces your risk profile.” [4]
- Might mean: You’re earlier than they usually invest, based on their typical check-size and corresponding traction expectations. They’ll struggle to write you a $2M check with just an idea, whereas they might write you a $2M check with seed stage traction. This can be frustrating, because you will see them sometimes back founders with less traction than you have, e.g., “a multi-time founder that they want to get on to the cap table early, perhaps it fits a certain topic/thesis area they're looking for investments within.” The takeaway for you here is it’s a “No” for now. If you get traction that would make you appealing for their typical investment stage, you can circle back. [5]
- “Come back when you have some traction” [4]
- See “...you are still a little early…”
- Might mean: “I know I said traction, but that’s just because it’s an easy word that I don’t have to define, and you think you know what it means. Also, you will never ask me to be specific about what I consider traction to be. Truthfully, what I mean is velocity. I want to see real significant growth in a real market. If you can do that, then your risk profile reduces, and I can evaluate if you have an investable business.” [4]
They might be interested:
- “Let’s schedule another meeting to dig into [thing to dig into]” [3]
- Might mean: “I’m interested and willing to commit more time to this”
- “I’d like to understand more about [insert thing to hear more about]” [3]
- Might mean: “I have some interest but also some questions. I’m willing to put in at least some more work”
- Tip: “Actions speak louder than words. Investors are interested if they are engaging. Examples of such follow-ups include asking for another meeting, suggesting to talk to other partners or friends of the firm, running references on you, wanting to talk to customers or partners, and so on.” [1]
Why don’t they just say “No”?
Deyan has a nice simple answer to this:
You may notice that most of the “nos” above don’t sound like a typical “no.” That’s because investors don’t have any incentive to actually turn you down. After all, [why] preclude an option, which may turn out interesting down the road? Many funds continue to grow in size, so even if an investor misjudged at your seed round, perhaps they can invest at the A round. And a non-“no” like some of the examples above gives plausible deniability - it’s not that they didn’t want to invest, they just missed you.
Seth Levine from Foundry Group adds:
I’ve come to realize that many – most – entrepreneurs suck at reading pitch meetings. Frequently what I hear from a company CEO is completely uncorrelated to what I hear from the VC they were pitching. In thinking about why this is, the answer is actually relatively straightforward: VCs are predisposed to give good meetings AND By being equivocal at the end of a meeting they preserve maximum option value.
So, how do you get a real answer?
There’s no magic bullet for getting a real response, but a few founders and VCs suggest Asking Quite Frankly ™ at the end of the call.
Tommy, co-founder of Alloy.co, shared the approach he got from Techstars:
At the end of a meeting where it is possible they could be nearing a yes/no, ask them where they stand:
“Where do you stand on this at the moment and are there any next steps?”
They may say some version of no, but often if they’re interested they’ll say something like this:
“We like this, we’re thinking about doing $250,000 in this round but want to dig in more. We’d like to introduce you to a potential customer and get their feedback”.
From there, you respond with actively listening like this:
“So it sounds like you’re thinking about $250,000 pending due diligence with a potential customer or two. Anything else beyond that?”
And so on. At the end of that, you actually HAVE a version of yes. It may be “yes we’re in” but more likely it’s “we’re in for $250,000 pending thing 1,2,3 going well”. How many things are after the “pending” field determine whether it’s truly a commitment at all, a soft commitment, or a hard commitment.
Seth Levine seconds this, suggesting that 5 minutes before the end of the meeting you ask “What do you think?” and genuinely listen to the response.
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