20 micro-signals VCs use to eliminate founders

Have you ever wondered how a VC can review 20 decks per day and still be on time for padel at 5pm?

That's because of “signals”, of course.

Signals are tiny hints used by investors to make a quick decision about your company.

No need to sit down with you, no need to listen to your vision… Instead, they identify 2-3 negative signals about your company and quickly eliminate it, alongside 95% of their deal flow of the day. Easy-peasy.

The surviving 5% get the privilege of a 30 min call.

Unsurprisingly, many founders hate that. They feel that investors who rely on signals are being lazy, shallow, and not doing the job they are paid for.

Well, maybe…

But think of signals as mental shortcuts.

For example, an ugly deck signals a lack of empathy and poor marketing skills. It doesn't mean the startup will fail, but it is directionally correct. And when signals pile up in the same direction, you can confidently rule out a project without truly understanding it, the same way you would eat a Big Mac without ever truly looking at it.

Therefore, founders should care about signals.

Understanding your signals will not only increase your chances to get funded, it may also help you flag and fix underlying issues in your business.

Without further ado, let's jump into the hellhole of VC signaling.

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The date on your cover slide is outdated

This is a great example of a micro-signal most founders won't think about.

When your deck cover says “March” and it's May, you're telling investors that you have low attention to details. Worse, you're signalling that you've been raising for 2 months and still on the hunt.

Do you think I'm making this up? Well, here's what renowned VC Jason Lemkin had to say about it:

(I broke down this story in my post VCs aren't your friends.)

Even assuming you keep your cover updated, your old deck will still circulate behind your back and reveal the actual date you started raising. You don't want that.

The solution?

Just don't put a date on your cover. That's the smart thing to do.

Your SAM is larger than $100B USD

When a founder claims a $100B+ market, their market sizing is usually too broad and therefore, the maths is wrong.

Let's say you're building a mobile app for personal budgeting. Your market size is NOT $935B (global spending on mobile apps in 2023 according to Statista).

You have to narrow it down:

Is your app available in China? Then remove all Chinese consumers.
Is your app sold to professionals? Then remove the B2B segment from your market size.
Is your app relevant to people who don't budget? Then that's another chunk you take away from your market size.
Etc etc.

If you slap a humongous market size on your deck, you better back it up well.

“If we just capture 1% of the market…”

There's nothing wrong with the sentence in itself, but it's been overused by founders dreaming aloud in front of investors, so it's become a red flag.

You're better off not saying it.

Your SAM is smaller than $1B

The “SAM” or “Serviceable Addressable Market” is the market suze that investors care about. As a startup, you're supposed to capture a portion of that SAM within 7-10 years, and this portion times a multiple will determine your exit valuation.

Now, let's do some basic VC maths.

Long story short: show VCs that your market is large enough to support a VC-friendly exit.

This means a SAM above $1B.

You make empty claims

When communicating with investors, be specific.

A common mistake consists in making big claims about your team, traction, or tech, but not supporting them with facts.

This is a problem because many wannabe founders are total bullshitters. You don't want to be one of them. So when communicating with investors, always back up your claims with facts, names, and numbers.

You ask for a NDA before sending your deck

This is a classic signal for “I have no idea what I'm doing”.

Founders are sometimes concerned that investors may steal their ideas. They usually come up with the same solution: "I will ask for an NDA before sending my deck."

Yet, the NDA, or Non-Disclosure Agreement, is a document that no self-respecting investor will sign on first contact. I deep dive on the reasons in this post Why VCs won't sign your NDA.

In short, a NDA may be warranted when you reach the due diligence stage. Before that, you will look like the infamous meme.

‘We have no competition”

This one is another “instant death sentence”.

It is virtually impossible for a startup to have no competition.

Instead, you probably have two dead angles:

Other teams are building similar tech, and you're not aware of it. For example, a Chinese team is also building a car engine that runs on water, and you just don't know about it.
Other products are solving the same problem with a different solution. For example, a petrol engine, an electric engine, a horse, would all be competitors to your water-powered engine as they all solve the same problem - make the car go vroom!

If you don't want to sound silly, get a good grasp of your competitive landscape - not just the tech, but the overall value proposition.

The cofounders own less than 50% after Series A

It is generally admitted that the founders should collectively own 50%+ of the cap table after Series A in order to be sufficiently incentivized. This means owning at least 70% after seed.

If you own less than that, some VCs may see this as a red flag and pass.

For reference, here's how much equity successful founders owned at IPO, courtesy of Blossom Street Ventures.

And yes, Hubspot sold 47% of their cap table at Series A. It was back in 2007.

It's 2025, people. We don't do that anymore.

You have dead equity on the cap table

The early days can be messy for your cap table.

Here are some of the horror stories you might encounter:

A university (probably British…) owns 30% of the cap table because part of your tech was born in their labs
A cofounder leaves right after year 2 with 25% of the company
An “angel” investor gave you the $50k you desperately needed - for a 30% stake
A startup studio owns 50%+ of the company at pre-seed
A greedy advisor somehow ended up with 5% of the cap table

As a consequence, you're unlikely to be able to retain enough ownership for yourself. You will also struggle incentivizing the employees you need. And finally, you're signaling poor judgement and decision making skills.

And look, I'm not blaming the founders here. Every startup has a different origin story. You gotta do what you gotta do to get things off the ground.

But when it's time to raise, investors don't care about the “why”.

They just see a broken cap table. A millefeuille.

Your cap table shouldn't look like this (source Extantia)

Your market size is expressed in volumes rather than value

It's a small detail, but when discussing market size, you want to express it in value: USD, EUR, etc.

Of course, you should know the underlying volume assumptions.

But what everyone really cares about is the $ value.

Your market sizing is top-down rather than bottom-up

There are two ways to calculate your market size:

Top-down: You just grab a number from whatever online market research
Bottom-up: You multiply the ARPA by the # of clients in your market

The bottom-up approach is preferred by investors because you have control over the underlying assumptions. You can't pull the number out of thin air, you must have done your homework.

So when discussing market sizing, display a bottom-up approach.

Here's another example of a good market sizing

You're not a Delaware C-Corp (or a VC-friendly legal entity)

If you're talking with American VCs, they almost always only invest in Delaware C-Corp.

If you're raising in Germany, France, China.., there is a form of legal entity preferred by VCs for each jurisdiction.

There are reasons for that, mostly taxes and jurisprudence. And yes, you may have started as an LLC. But make sure you flip to the VC-friendly entity BEFORE engaging conversations. Otherwise, it's yet another negative signal that you're just not investable yet.

“Looks cool, come back when you have a C-Corp”

You have no chef in the kitchen

A restaurant needs a chef. A plane needs a pilot. A tech startup needs a tech lead.

No investor will seriously consider investing in a tech company that doesn't have a tech lead in place.

Actually, most VCs prefer when the tech lead is one of the founders. It's a strategic role, and you want someone fully committed to the company.

So no CTO = 90% red flag

Your pitch deck is ugly

You know how founders obsess about their homepage: they iterate on the design and UX, refine the fund, adjust the copywriting, measure bounce rate, etc.

Well, your deck plays the same role for investors. Your deck is the landing page of your raise.

For your own sake, make sure it's not too ugly. Font, palette, alignment, text density… Just give it a bit of love. Get a template or a designer if you need help.

Come on, let's be honest. Would you rather read the deck on the left or the right?

Your want to sell to everyone

This is another sign of an inexperienced founder: he or she wants to sell to everyone.

“Our product is amazing. It will sell to men and women, young and old, all around the world. Our market is everyone”.

Veteran founders know it's not true. You can't be the best at everything, especially not in the early days when resources are scarce and you need to focus your efforts.

Instead, you should “start small and think big”.

Identify a beachhead i.e. the intersection of a relevant segment and application. Dominate it, then expand methodically following the “Bowling alley” model developed by Geoffrey Moore in “Crossing the Chasm”.

This is what investors expect, and what has proven to work repeatedly.

You talk about exits too much and too early

Talking about exits when you're raising pre-seed is a premature conversation. You should be worrying about getting to PMF instead.

Founders obsessing early about exits can be a red flag for investors.

There are really only two cases where it's ok to have an “Exit” slide in your deck.

You're building with the explicit purpose of a strategic acquisition. Typically, you already know who the buyer will be, you already have connections there, and it's almost an insider play.
Your founding team has had previous successful exits, so you know what you're talking about. You're not going to sound like a delusional dreamer.

See the slides below. Square had an Exit slide, but they also had the CEO to back it up. And it was a Series C.

You use jargon like “disruption” or “transformation”

Investors are allergic to jargon.

You may think jargon sounds smart, but the room is full of smart people, and you're not going to impress anyone. Quite the opposite actually - you will annoy the hell out of whoever is still listening to you.

Paul Graham has championed “ speaking simply ” for startups and VCs, and it has gradually become the norm in the industry.

So keep it simple.

You misrepresent your traction or track record

Sometimes, I get emails from founders claiming “a previous 8 figure exit” or “revenue growing 40% MoM”. Nice!

Then we get on a call. It turns out that the founder was a junior at that company that exited, not the CEO. And that revenue growth? Yes, revenue grew… from $100/mo to $140/mo.

You wasted my time, and in the process, you nuked your credibility.

Don't mislead investors to get a meeting. Your name is your most precious asset.