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Have you ever tried to pitch your dream idea to a VC only to find their reply sound like some whole new language? Have you ever gone crazy pulling your hair over trying to decipher the VCs reply? If yes, and if you find deciphering the real meaning out of what they say as hard as trying to solve the ‘da vinci code’ then let us help you.

We have been exactly where you are and know how notoriously VCs twist their words to get the upper hand. So, we are here to break down some of the jargon VCs use and tell you what exactly mean by what they say.

1. What is your market size?

VCs are usually really keen to know about the market size and opportunity. Basically, when they ask you about the size of your market and your competitors, they are sizing you up and deciding whether the concept is good enough.

For them it is easier to invest in an idea that is already road-tested for success. If your market opportunity is big based on the success rate of pre-existent ventures along similar lines, the VCs feel safer investing in your venture compared to an absolutely new idea with more risk involved.

So, having a pre-established competitor actually works in your favor when it comes to getting funded. Who would have thought, huh?

2. Show me your traction

VCs love facts and proof. And, their way of asking for it is ‘traction’. So, when they ask for traction, they basically want quantitative evidence of market demand.

They want to know if product is attractive to the customers and if there is demand for it. For this, they need specific figures. These should mostly include stats representing profitability, revenues, user base, engagement, traffic, etc.

The best way to go about it is to use these figures creatively, imaginatively and honestly to tell your story so far.

3. We back founders/ the founding team

These words don’t always hold absolute credibility. As much as the capabilities of the founder and his/her team matter for the success of the venture, it is more important for the idea to have some potential.

VCs are more likely to invest in a market already proven for success, i.e., a ‘hot market’ than in just a credible, dedicated team. All in all, the hotness of the idea and market matter more for the VC when taking investment decision than that of the entrepreneurs.

They might even be willing to overlook some shortcomings of the team if the idea is good enough. They might dismiss inexperience as a youthful mistake, as they are more likely to invest in youngsters, if the idea is good enough.

4. I will come back to you in a while

Never have those words been used in a literal sense. Same is true in the VC world too. True to form, they are the euphemistic term for ‘I can’t say no to you directly’ in the startup world too.

We hate to break it to you but if that’s the response you got from a VC, we’d suggest you start pitching your idea to others other than waiting for that ‘while’ to be over. That is one call that’s just not coming.

5. You lack what it takes

VCs have a way with words. They always know what to say to get what they want. They usually do this by making the entrepreneur feel inadequate and seemed to have mastered this art.

They always find a way to subordinate you by making you feel like you ‘lack what it takes’. Their ‘ifs and buts’ just never end. Don’t let them get to you as this is all a trick. Make sure you handle them wisely and don’t let them get the upper hand.

6. Not blue flame enough

It is a youth driven world, and just like in the advertising industry, startup world doesn’t like to bet on old horses either. And they even have a term for it.

‘Blue flame’ is used to refer to young, budding entrepreneurs, mostly in their 20s with a lot of energy and time and less commitments. Blue flame is the fire that burns brightest and that is where the allusion is taken from. VCs are more likely to invest in such blue flames than older entrepreneurs whose days in the sun, according to the VCs are short-lived.

When referring to someone older they don’t have too much faith in, they are heard to use the term ‘not blue flame enough’.

But, age is just a number. As a confident founder, you must not let their lack of faith get to you. Prove them wrong and use your age and experience as your strength. Take notes from AtScale CEO Dave Mariani in this matter, who was turned down for the above reason.

Read his inspirational story here.

7. You’re a chemistry risk

Even though who you take on as part of your team is up to you, the VCs often give their opinion about a probable unsuccessful ensemble in subtle terms.

They have a lot of experience in the startup world and know when a team is not destined to work out. They call such teams a ‘chemistry risk’ bound to explode.

This usually happens when there are a lot of hot-headed blue flames on board. Many a potential ventures have been known to disintegrate due to internal conflicts. So, next time you hear the term chemistry risk in reference to you or your team, know that it’s time for some retrospection.

8. Where are you in the fundraiser process?

When VCs ask the above question they are trying to get an idea of how hot the deal is. They want to know if it is attractive enough to get other investors interested.

The more interested investors you have the more attractive your venture gets to the VC. At such times, they would want to act fast so as to not risk losing you to others.

You must handle this question cleverly, making your idea seem attractive, while not giving away too much information.

9. What are your valuation expectations?

Here they are trying to get out of you what your valuation expectations from them are. They would like to know that it is reasonable enough for them to even consider continuing negotiations and is not a waste of their time.

Your answer here is crucial as not only does it guide the VC as to whether or not to even continue with the talks, but also in letting them know how highly you think of your venture idea. They need to know the deal is realistic enough to be good for both parties.

Make sure you handle this one deftly.

10. We are long term partners

Just like everyone, VCs are selfish people and want what’s best for them first. So, their assurance that you and them are ‘long term partners’ is always incomplete.

They always only want to associate with a profitable venture and when you stop being profitable they stop supporting you. So, don’t take their assurance at face value and make sure you draw up strong paperwork with the help of able legal aid to protect you in hard times.

Always keep in mind that if your venture ship starts to sink, they’ll be amongst the first ‘rats’ to desert.

We hope you found these explanations helpful and have taken valuable lessons which will help you ace your VC negotiations. Do let us know what you thought of the above explanation and if you have any more terms to add to the list.