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Early-stage founders: did you ever wonder whether VCs mean it literally when they say that you are too early, outside of their investment scope, that they usually do larger tickets, wish they had the money to invest, and will cheer for you from the sidelines? Do you know what ‘key moat’ means, what a ‘blue ocean’ is and why liquidation preferences are important?
VC lingo is designed to serve the business model of having to say ‘no’ 999 times vs ‘yes’ once, and uses probing technical terms to get to that decision fast. In staying vague, VC lingo has a few objectives:
Brought to you by Intel Ignite (and Flashpoint- tbc), this VC lingo ‘dictionary' aims to unpack the nuances of VC lingo. It is meant as a guide for getting a sense of what VCs are asking for, and what the underlying signals can mean. We have added a ‘tone’ to help interpret the terms. We encourage you to also look up and be well versed in the ‘technical’ definitions.
Is this meant literally? It depends. This term can mean: lets keep a line of communication open for when the company is more advanced on product, revenue, valuation. VCs can have specific preferences regarding maturity/growth stage of businesses they invest in, this can be due to requirements in how the fund is set up and where the money it is investing comes from. But the term is frequently used as a way to signal no interest.
Tone: (neutral-negative)
Is this meant literally? It depends. VCs can have internal procedures where they check how big they think what companies are doing can get eg do they believe this is a big and growing market, is it complementary or competing with the existing portfolio of companies they have invested. It may take VCs 1-3 weeks to get back while they are going through this early due diligence process. VC teams have regularly scheduled internal discussions where they decide to advance or not. But its luke warm - the term is often used as a way to signal no interest without closing the door.
Tone: (neutral-negative)
Is this meant literally? It depends. VCs can have internal procedures where they check how big they think what companies are doing can get eg do they believe this is a big and growing market, is it complementary or competing with the existing portfolio of companies they have invested. It may take VCs 1-3 weeks to get back while they are going through this early due diligence process. VC teams have regularly scheduled internal discussions where they decide to advance or not. But the term is often used as a way to signal no interest without closing the door.
Tone: (neutral-negative)
Is this meant literally? It depends. These things are all related to validation and derisking. The terms “traction” ‘POC’ ‘revenue’ typically mean measurable things such as money in the bank, contracts signed, user or customer growth. Since it refers to something measurable, the answer leaves the door very explicitly open to connect back whenever the measurable thing has happened.
But they should indicate what ‘more’ means to them (for you to know when to connect back once you have reached x revenue, users or customers). If you are left not knowing what ‘more’ actually means, it may also be a way to say no interest without saying no.
Tone: (neutral)
Is this meant literally? In principle yes. The term “progress” typically means measurable things such as revenue, user or customer growth. Since it refers to something measurable, the answer leaves the door very explicitly open to connect back whenever the measurable thing has happened. And the ask for an update signals explicit interest.
Tone: (neutral-negative)
Is this meant literally? It depends. Yes: VCs weigh risk vs. potential return and, to make an investment decision they need to understand where risk and returns come from and how to gradually eliminate vs increase them respectively. “A bit early” may say more about how a VC thinks about risk and ROI than it says about you. This answer may leave the door open for the future, when you are more advanced on derisking and commercializing the company.
But even at early stages VCs will have some sense about whether what you are doing is interesting and likely to be successful. This term, unless it is accompanied by other terms that make is more explicit that the VC wants to stay connected, is used as a way to signal no interest without saying no.
Tone: (neutral-negative)
Is this meant literally? Probably not. Yes: VCs typically have an investment thesis that guides their investment decisions. This can be more or less defined in relation to things such as type of technology, growth stage, industry, geography. Example: from as broad as ‘hardware’ to as detailed as workflow orchestration for genAI. This thesis depends on things like what they know, how they see the market, what they have worked on, invested in previously, and made and lost money on in the past, and who has invested in their fund. It is possible that your company falls completely outside of all these things.
But to meet with you in the first place there will typically be something about your company that falls within the investment thesis. The term is frequently used as a way to signal no interest without saying no.
Tone: (neutral-negative)
Is this meant literally? Probably not. Yes: VCs typically have specific areas they invest in, for example type of technology or industry (deep tech, fintech, consumer goods, energy) or business model specific (SaaS, IP licensing). The focus depends on what VCs know, how they see the market, what they have worked on, invested in previously, and made and lost money on in the past, and who has invested in their fund. It is possible that your company falls completely outside of that focus (eg you may just not be a clean teach company and that is the premise on which they raised the fund on).
But to meet with you there will typically be something about your company that falls within that focus. The term is frequently used as a way to signal no interest without saying no.
Tone: (neutral-negative)
Is this meant literally? Possibly yes. VCs typically have a model/ investment thesis that guides their investment decisions. This can be defined in relation to things such as type of technology, growth stage, industry, geography, life of the fund (most funds tend to be set up for 10-12 years), what they know, how they see the markets, what they have worked on, invested in previously, and made and lost money on in the past, how big the fund and who has invested in their fund. Especially the size of the fund and who has invested in it can operationally restrict how the fund makes investments.
But the term is also frequently used as a way to signal no interest without saying no.
Tone: (neutral-negative)
Is this meant literally? Yes. It’s a bit of a convoluted way of saying that there was not enough convincing input to sway the VC to write a check. This can be related to a few or many things: from product, market, team, customers to gut feeling and chemistry.
The term is a clear no. And many VCs will not be clear on what it was that stopped them from investing. Often this comes after having spent time and effort to evaluate a company, so tends to be a definite no. On occasion it can be wrapped into a future perspective – eg if x or y aspects are addressed/changed.
Tone: (negative)
Is this meant literally? Possibly yes. Ticket (or check) refers to investment size. VC funds are vehicles to make money. VC mechanics mean that the mathematics of investing need to check out for every investment. Some VCs want to stay invested in a company through growth stage so the investment size and corresponding equity need to be large enough for the fund to make money – eg not get too diluted. The mechanics of VC dictate that because most investments fail, every investment should have the potential to return the fund (ie do the math of comparing the fund size to the return your company can make , and see if it can even match). Also, different funds are willing to take different levels of risk, ie some VCs may not be willing to invest pre-revenue.
But if the return mechanics work out and a company is doing something really interesting, then most VCs can find a way of investing smaller/at lower equity than they typically would.
Tone: (neutral-negative)
Is this meant literally? Not really. Yes: there are so-called ‘zombie’ funds that have invested all their money and are not able to fundraise more with LPs. These funds may meet with companies in an effort to show that they are still active. But they would not tell you or anyone in the face that they have run out of money. These are expressions that signal no interest
Tone: (negative)
Is this meant literally? Yes but not in the fire sense. This means the investor or fund have had a bad experience related to the technology, industry or market. Bad experience = a company they invested in in the past failed, eg because the market did not materialize, or demand did not build up fast enough.
This term may say more about the investor’s approach than about your company’s potential. But you are up against at least one and potentially several people who do not believe that money can be made with what your company does.
Tone: (negative)
Is this meant literally? Yes. This term means that based on what the VC calculated given your company’s and their fund’s position, they expect to not be making (enough) money if they invest. This can be about them (returns they are expected to make, how much they believe in a market) or about the company’s financials, market position, and growth potential.
But often this term means: would love to invest if it were possible to get more equity cheaper. So the question may be around how much equity are you willing to give up to give them a better deal.
Valuation in early stage tends to be highly dependent on FOMO.
Tone: (neutral)
Is this meant literally? Absolutely. FOMO stands for fear of missing out. While VCs will tell you they make decisions based on facts and data, the truth is that many investment decisions are heavily skewed by fear of missing out on a potentially lucrative deal. Especially with early stage companies where a lot is around assessing potential. The good news is that FOMO can be used as a tool to get several competitive offers from VCs meaning a sort of bidding environment that can result in high valuations. The bad news is that VCs tend to pile up around the competitive deals so will be saving their cash for those investments vs considering to invest if the situation is not competitive.
Tone: (from super positive to super negative)
Is this meant literally? No. These are more or less polite expressions of signaling no interest.
Tone: (negative)
Is this meant literally? Yes, these are positive terms, unless followed by ‘but’.
Tone: (positive)
Is this meant literally? In principle yes. These are slightly inflated terms but all positive
Tone: (positive)
Is this meant literally? No. But these are terms with a positive connotation for startup performance or growth potential. Most commonly known is the ‘unicorn’ = privately held company with $1billion+ valuation. Minicorns and Soonicorns are a ‘young unicorns’ that based on milestones, growth or traction are expected to become unicorns. Minicorn = valuation between $1million and $1billion. A centaur = $100million annual recurring revenues (ARR).
Tone: (positive)
Is this meant literally? No. But it can mean anything from very positive to very negative depending on context. In a positive context a moonshot can mean a company with a significant, transformative impact that has the potential to revolutionize an industry or create an entirely new market. This is positive because it can generate outsized returns. In a negative context this translates to overly ambitious, unrealistic or unachievable. That would equate to startup that is set to fail and generate zero returns.
Tone: (from super positive to super negative)
Is this meant literally? It depends. To some extent these terms can reflect how VCs invest – eg ‘disruptive’ may indicate fundamental type of technologies that are protected by IP, and ‘founder first’ can reflect that they have a hands on approach to supporting founding teams - but often these are just things VCs say to sound fancy.
Tone: (meh)
Is this meant literally? Yes. A deck is a concise way of having important info about a company in one place. VCs tend to look at thousands of companies a year and only invest in a few. When a VC asks this question as a first ask, they are often asking about a convenient way to evaluate a company without having to do a meeting. The info in a deck and the way a deck is structured can be sufficient for a VC to not want to take further steps with you. VCs also often share decks with other VCs. Avoid sending decks with information that could be harmful if it ends up in your competitors’ inbox. Opt for sharing decks that have little but precise and relevant information that can be broadly shared, and will get a VC to take a meeting with you.
Tone: (neutral, with potential to go negative) high alert!
Is this meant literally? Yes and the nature of committing softly is that it can also quickly turn into a no
Tone: (neutral-positive)
Is this meant literally? Yes, this signals interest
Tone: (positive)
Is this meant literally? A term sheet tends to reflect significant commitment from the VC. But it is non-binding so possible to reverse.
Tone: (positive)
Is this meant literally? Yes, closing an investment round means all legal documents are signed and money is being wired into the bank account.
Tone: (positive)
Is this meant literally? No, but it is meant figuratively. Moat is the thing around a castle often filled with water. USP stands for unique selling point. Ocean stands for a competitive place where big and small fish are competing in a Darwinian way (red means lots of fish already competing and regularly some do not make it, blue means fewer fish and lots of space to take over). A "sticky" product is one that customers continue to use, engage with and pay for regularly over time.
All these terms are linked to differentiation, competitive edge and how able a company is to keep making money and grow given there are existing players or competitors that may in the future come into the market. The question is what makes a product, service and business model uniquely valuable to customers compared to others, and likely to keep those customers paying for it. This tends to be linked things such as IP, uniqueness of a technology, stickiness of a product, customer loyalty, brand strength and network effects.
Tone: (neutral)
Is this meant literally? Yes. This is a question about how your business is protected (eg via patents, trademarks, copyrights, trade secrets) and related to the question of continuing to make money and grow given there are existing players or competitors that may in the future come into the market.
Tone: (neutral)
Is this meant literally? No, but figuratively it conveys that a business model is not convincing. Competing solely on price in a way that destroys a market is not a convincing value proposition.
Tone: (negative)
Is this meant literally? Yes, it’s asking if you are building something that there is a market for, or in other words is the customer problem your product is solving big enough of a pain for a sufficiently critical mass of customers willing to pay to have that problem solved. Validation is the data and proof points to show for that and can take the form of customer feedback, sales, and market intelligence and benchmarking.
Tone: (neutral)
Is this meant literally? Yes, it’s asking where and how you position what you are building compared to the rest of the industry you are in ie who supplies what to you and who and what do you supply to others. Its linked back to the question of the problem your product solves.
Tone: (neutral)
Is this meant literally? Sort of. This is fundamentally a question about two things: how fast can you sell, and do you know your customers.
Tone: (neutral)
Is this meant literally? Yes, this is a question about whether you know your customers.
Tone: (neutral)
Is this meant literally? Yes, there are terms that ask about whether you know your customers. An Ideal Customer Profile (ICP) is essentially a customer that represents a sufficiently large group of customers that will pay sufficiently much for your product to make your company sufficient money to build a successful business.
Tone: (neutral)
Is this meant literally? Yes, this is a question about financials and operational efficiency. It requires investing in sales first, in order to then turn a customer into a customer. The faster it is possible to recoup that investment, the better a sign. VCs are looking at CAC payback as a metric for growth potential.
Tone: (neutral)
Is this meant literally? No. This is a question about why users or customers do not seem to want to continue using or buying your product. VCs are looking for an analysis of why that is happening and concrete details on what is happening to fix it.
Tone: (negative)
Is this meant literally? Sort of, this is a question about people. VCs want to know what type of people founders are, what motivates them, what do they know and not know. If its several founders, how do the founders gel together, and is the relationship likely to work out long term. The vision question is also about commitment to sticking around and making the company successful.
Tone: (neutral)
Is this meant literally? Yes. GTM stands for Go-To-Market and is a question about whether you know the customers, market dynamics, product, and how it differentiates from competitors. It relates to things like sales strategy, marketing, distribution, and pricing.
Tone: (neutral)
Is this meant literally? Yes. These terms are ways to ask about how a company plans to - and then actually makes - money, and the financial metrics used to measure this now and project it into the future These terms ask about financial planning and different growth scenarios.
Note that in the current environment, expectation typically is that a company acts in a financially disciplined way vs burning cash.
Rule of 40 = growth rate + free cash flow rate > 40%, ie that the growth rate plus cash that a company has available to spend (after deducting operations and investments) exceed 40 per cent.
Tone: (neutral)
Is this meant literally? Mostly these terms are meant figuratively to describe different ways of planning and executing on growth.
Tone: (neutral)
Is this meant literally? Yes. This refers to changing focus and direction of the business. It’s a question about being flexible and fast to adapt to new circumstances.
Tone: (neutral)
Is this meant literally? Yes. There are terms that describe what type of revenue a business has /plans to have, and how certain that revenue is. They are used in questions to understand how much money your business can make how fast
Tone: (neutral)
Is this meant literally? Yes. These terms refer to how a company’s equity is structured. equity, including share allocations, equity dilutions, funding rounds, and key investors
Tone: (negative, neutral or positive depending on tone and context)
Is this meant literally? Yes. A lead investor is -typically a professional – investor who leads an investment round, which typically means they do the most due diligence and set the terms. Other investors joining the round will often rely on that lead investor to do most of the ground work. In early stage deep tech you want to work early on identifying and securing a lead investor. Having term sheets from several investors creates a competitive situation that tends to speed up the closing of the round and likely means better terms will be on the table (see FOMO)
Tone: (neutral)
Is this meant literally? No. But they do mean something very specific. These terms are related to availability of cash. Questions using these terms are about how much cash a company is making vs spending, how fast, and whether there is enough of it. VCs will ask about these to understand how well cash is managed.
Tone: (neutral)
Is this meant literally? Yes. These are questions about having a plan on how to spend money raised (e.g. on hiring people, developing the product, expanding operations). When VCs ask those terms, they are asking about a plan and how that plan is being or will be executed.
Tone: (neutral)
Is this meant literally? Yes. These terms all ask about whether there is a market: whether the market is generally big and growing, what market there is specifically for what the company provides and the part of the market a company is realistically set to actually sell to.
Tone: (neutral)
Is this meant literally? Yes. These terms are all linked to the journey of commercializing a product and building a company. VCs are asking about the plan for derisking the business (think of roadmap, product development, market adoption, are things scalable etc.)
Tone: (neutral)
Is this meant literally? Yes. This is a question about how incentivized employees are and to understand what the overall equity situation is and how founders think about incentives. VCs like to see key people incentivized. Typically it can makes sense to put aside 10-15% of a company’s equity for key employees. Being awarded partial ownership in the company means these employees are more likely to stay with the company and to work hard to make the company successful.
Tone: (neutral)
Is this meant literally? Yes. These terms about the first investor. The more credibility a first investor has in the market the more of a vote of confidence it can convey to other investors about the company.
Tone: (neutral to positive)
Is this meant literally? It depends. It makes sense to have a plan for how to exit a company, ie ideally get to an acquisition or an initial public offering (IPO). VCs will also map an exit scenario against your business as this is when and how they make money. But when VCs ask this question, it will often be about testing how founders are motivated. For early stage startups the better answer than to talk about exit plans can be to talk about the priority they are putting on the next steps to make the business successful, since VCs prefer to see founders focused on success now vs selling and leaving the company in the future.
Tone: (neutral, with lots of potential to go negative) – high alert !
Is this meant literally? It depends. Liquidation preferences (liq pref in short) describe who from the shareholders (investors, founders) get paid first when there is an exit. But VCs naturally will tend to protect their downside and ideally would want to cash out first, before everyone else. When a VC asks this question, it will often be about testing how much leveraging they have to push founders to accept their terms.
Tone: (neutral, with potential to go negative)
Is this meant literally? It depends. "pre-money" refers to a company's valuation before a funding round. Understanding it is key for a VC to understand if coming into a round and investing in a company is set to be a good deal for them or not, ie how much money they will need to put on the table in exchange for a percentage of equity. But VCs naturally want the best deal they can get, so they tend to prefer lower valuations. When a VC asks this question, it will often be about getting a number they can negotiate down further. Especially for early stage startups valuations are more of an art than a science. Avoid answering the question directly in a polite way and instead give VCs all the data they need to do their own exercise of thinking through what they think the company is worth.
Tone: (neutral, with potential to go negative) – high alert!
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