The complete dictionary of startup funding, venture capital, and investor terminology. Every term a founder needs to know, explained simply.
A provision that speeds up the vesting of equity, typically triggered by an acquisition or termination.
A fixed-term program that provides startups with mentorship, funding, and resources in exchange for equity.
An individual or entity meeting specific SEC financial criteria required to invest in private securities.
When one company purchases another company, either by buying its assets or its equity.
A high-net-worth individual who provides early-stage funding to startups in exchange for equity.
A group of angel investors who pool their resources to make larger collective investments in startups.
Protection for investors that adjusts their equity if the company raises money at a lower valuation.
A group of individuals elected to represent shareholders and oversee the management of a company.
Building and growing a company without external funding, using only personal savings and revenue.
The point at which total revenue equals total expenses, resulting in neither profit nor loss.
A short-term funding round to sustain a startup between two major financing rounds.
The rate at which a startup spends its cash reserves, typically measured monthly.
The total cost of acquiring a new customer, including marketing, sales, and related expenses.
A spreadsheet showing the equity ownership, dilution, and value of shares in a company.
The process of maintaining and updating a company's equity ownership records through software tools.
The share of investment profits (typically 20%) that fund managers receive as performance compensation.
The net movement of cash in and out of a business over a specific period.
The percentage of customers or revenue lost over a specific period, a key SaaS health metric.
A minimum service period before any equity vests, typically one year in startup equity agreements.
Basic ownership shares in a company, typically held by founders and employees with standard voting rights.
A condition or capability that allows a company to outperform competitors in its market.
An investment instrument that converts from a non-equity form into equity at a later date.
A short-term debt instrument that converts into equity during a future financing round.
Investment arms of large corporations that invest in startups for strategic and financial returns.
Raising small amounts of capital from a large number of individuals, typically through online platforms.
A secure digital repository where startups share confidential documents with potential investors during due diligence.
Startups built on substantial scientific or engineering innovation that creates significant competitive advantages.
The reduction in existing shareholders' ownership percentage when new shares are issued.
A percentage discount given to SAFE or convertible note holders on the next round's price per share.
A funding round where a company raises capital at a lower valuation than its previous round.
A provision allowing majority shareholders to force minority shareholders to join in the sale of a company.
The comprehensive investigation and evaluation of a company before finalizing an investment deal.
Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of operating profitability.
Ownership interest in a company, represented by shares of stock.
A planned approach for founders and investors to realize returns on their investment in a company.
A private wealth management advisory firm that invests on behalf of ultra-high-net-worth families.
The earliest informal fundraising round where founders raise small amounts from personal connections.
An investment fund that allocates capital across multiple venture capital or private equity funds.
The managing partner(s) of a venture fund who make investment decisions and manage the portfolio.
The percentage increase in a key metric (revenue, users, etc.) over a specific time period.
The phase where a startup has proven product-market fit and focuses on rapidly scaling revenue and operations.
An organization that supports early-stage startups with workspace, resources, and mentorship over an extended period.
Legally protected creations of the mind, including patents, trademarks, copyrights, and trade secrets.
The process of offering shares of a private company to the public for the first time on a stock exchange.
The primary investor in a funding round who sets the terms, contributes the largest check, and often takes a board seat.
A methodology for developing businesses through validated learning, experimentation, and iterative product releases.
An investor who contributes capital to a venture fund but does not participate in day-to-day management.
The right of preferred shareholders to be paid before common shareholders in a liquidation event.
The total revenue a business can expect from a single customer throughout their entire relationship.
A sustainable competitive advantage that protects a business from competitors, like a castle's moat.
Predictable, recurring revenue from subscriptions, measured monthly (MRR) or annually (ARR).
The simplest version of a product with enough features to attract early users and validate assumptions.
An event where startups present their business to judges for prizes, funding, or investor exposure.
A visual presentation used by founders to pitch their startup to potential investors.
A fundamental shift in a startup's business model, product, or target market based on market feedback.
The value of a company immediately after receiving new investment in a funding round.
The value of a company before receiving new investment in a funding round.
The earliest stage of startup funding, usually from founders, friends, family, or early angel investors.
A class of shares with special rights and preferences over common stock, typically held by investors.
Investment firms that acquire stakes in or buy out mature companies to improve operations and resell at a profit.
The right of existing investors to invest in future rounds to maintain their ownership percentage.
The stage where a product satisfies strong market demand, indicated by rapid organic growth.
Activities undertaken by a company to innovate, create new products, or improve existing offerings.
The total income generated by a company from its business activities before any expenses are deducted.
The strategy a company uses to generate income from its product or service.
A valuation method that values a company as a multiple of its annual revenue.
The amount of time a startup can operate before running out of cash, given its current burn rate.
A software distribution model where applications are hosted in the cloud and accessed via subscription.
A Y Combinator-created investment instrument that converts to equity in a future priced round.
A company's ability to grow revenue significantly faster than its costs increase.
A marketplace where existing shareholders can sell their private company shares to other investors before an IPO.
The first significant round of funding for a startup, typically used to build an MVP and validate market fit.
The first major institutional venture capital funding round, typically following seed funding.
The second major round of venture funding, focused on scaling the business to a larger market.
A later-stage funding round for companies looking to scale aggressively, acquire competitors, or prepare for IPO.
A legal entity created specifically to pool investor capital for a single investment in a startup.
The right to buy company shares at a predetermined price, commonly used as employee compensation in startups.
A provision allowing minority shareholders to sell their shares alongside majority shareholders in a sale.
The total revenue opportunity available for a product or service if it captured 100% market share.
A non-binding document outlining the key terms and conditions of a proposed investment deal.
The process of discussing and agreeing on investment terms between founders and investors.
Evidence of market demand and business momentum, demonstrated through metrics like users, revenue, or engagement.
The estimated monetary worth of a company, determined through various methods and negotiations.
The maximum company valuation at which a SAFE or convertible note converts to equity.
A form of private equity financing provided by firms to startups with high growth potential.
A type of debt financing for venture-backed companies that complements equity fundraising.
The process by which an employee or founder earns their equity over time based on continued service.