Probably the most recurrent question a startup company would ask is “Why am I having trouble raising money?”; and probably the one thing that investors everywhere have in common is the fact that they will absolutely not put their money into a startup that has not convinced them of its viability beyond reasonable, and sometimes unreasonable, doubt.


Investors will not put money into a startup for a variety of reasons: limited market size, poor product/market fit, lack of experience and so on, but when giving feedback on why a startup is not getting funding power, investors will not come out and tell you straight up that this is the reason. Here, according to Bryan Stolle‘s “Why won’t anyone give me money”, are some investor-lingo, and what they most likely, but not uniquely, mean:

1) “We need to put more money to work than you need and/or are asking for.”

This most likely means that you haven’t made the case that the market opportunity is large enough. Almost always a red flag.

2) “We would like to see more traction.”

Get more positive and successful experience, and/or they aren’t contented with the product/market fit.

3) “Your valuation is too expensive for our model.”

They are concerned about market size, they haven’t seen enough proof that the company can grow their high premium investment into the premium multiple; or the investment you are asking for really is too expensive to provide a reasonable probability of a venture return.

4) “The team is incomplete,” or, “We need to meet the proposed CXO before we can make an investment decision.”

They don’t have confidence in the existing team or entrepreneur and/or someone on the team appears to have little value-add or is detracting from the team in some way.

5) “This doesn’t fit our current thesis.”

Validate and confirm an investor’s focus before pitching to them. Investors are public about their focus. Ensure that your startup fits into their target area.

6) “It’s too early or too late for us.”

Too early: not enough proof of feasibility or sustainability (team quality, reference customers, product maturity, traction); Too late: the projected estimate is too expensive.

7) “We don’t think we will be able to get enough ownership.”

This just means that they do not think that the ownership stake being offered is balanced by the amount of risk they will take and the amount of work they have to put in to help make the company successful.

Yes, you can’t improve or make some hard decisions for yourself if you aren’t getting direct, real and accurate feedback. But unfortunately, it’s hard to give someone negative feedback, hence the ‘invention’ of their own language. However startups should not be too afraid or intimidated to ask for honest feedback. Of course, the quid pro quo is that you have to be mature enough to take it. Somewhere in that feedback is useful information for your business.


Photocredit: Merit Investment

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