VC Jargon Overload: How to Fix Communication Barriers in Venture Capital
After eight years in venture capital, I’ve observed a persistent problem: our industry’s overreliance on complex jargon. From technical acronyms to lofty descriptors, VC vocabulary often alienates founders rather than empowering them. It’s time we address this communication gap head-on.
The Jargon Problem in Venture Capital
Venture capital has long been perceived as an exclusive club, with language acting as an invisible barrier to entry. While diversity and inclusion initiatives have gained traction, linguistic barriers remain largely unaddressed. This creates unnecessary obstacles for founders navigating the fundraising landscape.
Key issues with VC jargon:
- Creates artificial barriers to entry
- Reinforces elitist perceptions
- Hinders clear communication
- Masks poor understanding of concepts
High-performing investment teams recognize that clear communication is fundamental to evaluating startups effectively. Cutting through jargon allows for more meaningful discussions about a business’s true strengths and weaknesses.
Two Types of VC Jargon: Efficient vs. Lazy
1. Efficient Jargon (When Used Properly)
Not all specialized language is problematic. Some terms serve as useful shorthand for complex concepts:
- NDR: Net dollar retention
- CAC: Customer acquisition cost
- LTV: Lifetime value
However, even efficient jargon requires explanation. Take “ARR” (Annual Recurring Revenue), which has multiple interpretations:
- Original definition: Total contract value divided by contract years
- Common usage: Monthly recurring revenue × 12 (proper only with net negative churn)
- Misused variation: Annual reoccurring revenue (often misleading)
ChartMogul’s ARR breakdown provides excellent clarification. The key is defining terms explicitly when using them.
2. Lazy Jargon (The Real Problem)
This type of language substitutes for critical thinking. Common examples include:
- “Huge tailwinds” instead of market analysis
- “Conviction” rather than specific founder strengths
- “Rockstar founder” without qualification
These vague terms mask superficial evaluation. A better approach is concrete description:
“Imagine you’re [target customer]. Previously, you used [old solution]. Our product lets you [new solution] because [key differentiator].”
The Broader Impact of VC Jargon
LinkedIn and Duolingo research reveals:
- 60% of workers must decode corporate jargon independently
- 40% report making mistakes due to misunderstood terms
In VC, jargon fluency often signals access rather than competence. This undermines diversity efforts by privileging those with “insider” knowledge. The problem intensifies in concentrated startup hubs like Silicon Valley, where language barriers can feel particularly exclusionary.
Building a More Inclusive VC Vocabulary
Resources for Founders:
- Comprehensive VC Glossary (100+ terms)
- SaaS Metrics Explained
- Venture Deals by Brad Feld & Jason Mendelson
Actionable Steps for VCs:
- Define terms explicitly when first used
- Encourage questions about unclear language
- Replace vague descriptors with specific analysis
- Lead by example in clear communication
Remember: jargon mastery reflects access, not intelligence or founder potential. By simplifying our language, we can make venture capital more inclusive and effective for all participants.
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