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Comment by ChuckMcM | Hacker News Reader

They 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 round."

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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 find a lead" is kind of notoriously code for "no".

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".

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.

"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.

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