signaling

Definition

The information conveyed to the market by investor actions, such as who leads a round or whether insiders participate in follow-ons. In startup land, subtext is text.

Example Usage

When our Series A lead didn't participate in the Series B, the negative signaling spooked other investors and killed the round.

Origin

Economics theory from Michael Spence's work on market signals (1970s)

Fun Fact

Signaling is so powerful that VCs sometimes invest in follow-on rounds they don't believe in, just to avoid sending negative signals that would doom the company.

Source: Market microstructure and information economics

Related Terms

Beginner

MVP

Minimum Viable Product: the absolute least you can build before showing it to humans, which somehow always ends up being the final product. It's the software development equivalent of serving someone a raw potato and calling it a restaurant soft launch.

💻 Tech / IT🚀 Startup / VC

Beginner

entrepreneurial

Having the qualities of someone who starts businesses, takes risks, and believes their idea will totally disrupt an industry despite statistical odds suggesting otherwise. It's the adjective form of optimistic delusion mixed with genuine innovation and an unhealthy comfort with uncertainty. Basically, it describes people who see opportunities where normal humans see reasons to keep their day job.

🚀 Startup / VC

Beginner

Angel Investor

A wealthy individual who gives money to startups in exchange for equity and the warm feeling of watching their investment evaporate. They're called angels because they appear from heaven with cash and then watch helplessly as you fly straight into the ground.

🚀 Startup / VC

Intermediate

vested

The magical moment when stock options or retirement contributions officially become yours to keep, transforming from corporate dangling carrot into actual ownership. It's the golden handcuffs' lock clicking shut, ensuring you'll think twice before rage-quitting. The startup world's version of 'you must be this loyal to ride this rocket ship.'

🚀 Startup / VC

Intermediate

Venture Capital

Money given to startups by firms who expect most of their investments to fail spectacularly, banking on one unicorn to pay for all the donkeys. VCs will fund almost anything if you put AI in the pitch deck and promise to disrupt something.

💰 Finance / Accounting🚀 Startup / VC

Intermediate

demonstration trap

When a startup gets stuck endlessly perfecting their product demo instead of actually selling to customers or raising funds. It's the entrepreneurial version of rearranging deck chairs on the Titanic.

🚀 Startup / VC

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