The Regrettable Outcomes of the Tower of Babel and Resultant Venture Capital Jargon

Long ago, mankind spoke one language. In our greatness, we built a tower to the heavens. To stop us from this hubris, our languages were divided, spawning corporate jargon, leaving us forever unable to unite again.

Today, I decode 3 terms in Venture Capital, so you can understand the secret language of venture capitalists.

1. Investor Conviction

Not all investments are made by consensus — many are driven by high conviction. A VC with conviction believes strongly in a startup’s potential, even when others hesitate.

• Consensus Investing: A startup gets backed when most partners at a VC firm agree. This often leads to “safe bets.”
• Conviction Investing: A partner takes a strong stance, even if others are skeptical, leading to bold, high-reward investments.
• High vs. Diversified Conviction Portfolios: Some VCs double down on a few startups (high conviction), while others spread risk across many (diversified).

Conviction vs Consensus ↗ · Conviction in VC ↗

2. Post-Investment: What Happens After the Money Hits?

Funding is just the beginning — what comes next is equally critical.

• Board Involvement: VCs often take a seat at the table, helping shape strategic decisions.
• Portfolio Support: From hiring and partnerships to follow-on funding, the best VCs act as long-term allies.
• Founder–VC Dynamics: Navigating this relationship is crucial — some VCs are hands-off, while others expect active engagement.

The Complete VC Investment Process ↗ · Navigating Post-Investment ↗

3. Secondary Sale: Liquidity Before an Exit

A secondary sale lets early investors, employees, or even founders sell shares before an IPO or acquisition.

• Primary vs. Secondary: In a primary round, the company sells new shares. In a secondary sale, existing shares are sold between investors.
• Why It Matters: Early-stage investors often cash out in later rounds, allowing fresh capital to enter. Founders can also de-risk without waiting for a full exit.
• Common Buyers: Later-stage VCs, private equity, or even strategic investors.

Secondary Transactions Explained ↗ · When & Why Secondaries Happen ↗

The more you understand VC, the better you navigate it.