- Accelerated Vesting – A provision that allows employees to access stock or stock options sooner than the standard vesting schedule. This is often triggered by events like an acquisition, IPO, or early performance milestones.
- Accelerator – A program offering mentorship, resources, and funding to early-stage startups in exchange for equity.
- Acqui-hire – When a company is acquired mainly for its talent, rather than its product or revenue.
- Anchor Investor – The first (and often biggest) investor in a funding round who helps build credibility.
- Angel Investor – An individual who invests personal funds in early-stage startups, often before institutional VC funding.
- Anti-Dilution Protection – A clause that protects investors from dilution if future funding rounds are at a lower valuation.
- AI-Native Startup – A company built with artificial intelligence at its core. These startups rethink product design, operations, and business models around AI, rather than simply integrating AI features.
- AI Safety/Alignment Risk – A consideration in evaluating AI startups, referring to how the company manages the risk of unintended or harmful AI behaviour.
- Blitzscaling – A strategy of prioritising rapid growth over efficiency, particularly in winner-take-all markets. Coined and popularised by Reid Hoffman.
- Bootstrapping – Building and growing a startup without external funding, using personal savings or revenue.
- Break-even Point – When a startup’s revenues equal its costs, indicating it’s no longer operating at a loss.
- Bridge Loan – A short-term loan used to extend runway until the next funding event (slightly overlaps with Bridge Round but more debt-focused).
- Bridge Round – A short-term funding round that helps a startup get from one major round to another.
- Burn Multiple – A metric showing how much a startup spends to generate each dollar of new ARR (Burn Rate ÷ Net New ARR).
- Burn Rate – The rate at which a startup spends cash, usually expressed monthly.
- Business Model – The plan for how a startup creates, delivers, and captures value (e.g., SaaS, marketplace, D2C).
- Buyer Persona – A detailed representation of a startup’s ideal customer, based on data and research.
- Cap Table (Capitalization Table) – A table showing a company’s equity ownership, investor stakes, and dilution over time.
- Carry (Carried Interest) – The percentage of profits a VC firm earns from successful investments, typically around 20%.
- Cliff – A vesting rule where no equity is earned until a specified time (usually 1 year), after which equity starts vesting.
- Cohort Analysis – Tracking a group of users over time to measure behaviors like retention, churn, or revenue.
- Community-Led Growth (CLG) – A go-to-market motion where adoption and retention are driven by engaged user communities (e.g., forums, events, open-source groups).
- Convertible Note – A debt instrument that converts into equity at a later funding round, often at a discount.
- Crowdfunding – Raising small amounts of capital from a large number of people, typically via online platforms.
- Customer Acquisition Cost (CAC) – The cost of acquiring a new customer, often compared to LTV (Lifetime Value).
- Data Room – A secure place where a startup shares sensitive information with potential investors during due diligence.
- Dilution – Reduction in ownership percentage due to new shares issued in a funding round.
- Down Round – A funding round where the company’s valuation is lower than in previous rounds.
- Drag-Along Rights – Legal rights that allow majority shareholders to force minority shareholders to join in the sale of the company.
- Due Diligence – The process VCs undertake to evaluate a startup’s viability, including legal, financial, and business checks.
- DAO (Decentralised Autonomous Organisation) – A blockchain-based organisation governed by smart contracts and token holders, with no centralised leadership.
- Equity Financing – Raising capital by selling shares of the company.
- Exit – A liquidity event, such as an acquisition or IPO, where investors realize returns on their investment.
- ESOP (Employee Stock Ownership Plan) – Important in cap tables and hiring, regardless of startup type.
- Follow-on Investment – Additional funding provided by an investor after the initial round.
- Founders’ Liquidity – When founders sell a portion of their shares before a full exit, typically during a secondary sale or tender offer.
- Fully Diluted Shares – Total shares outstanding including options, convertibles, and warrants.
- Fund of Funds – An investment strategy where a VC firm invests in other venture funds rather than directly into startups.
- General Partner (GP) – A partner at a VC firm who makes investment decisions and manages the fund.
- Go-to-Market Strategy (GTM) – A company’s plan for reaching and serving customers to drive growth.
- Growth Stage – A later phase of a startup characterized by proven product-market fit and a focus on scaling.
- Haircut – A reduction in valuation or investment size, often due to risk factors.
- Hockey Stick Growth – A sharp increase in a startup’s growth or metrics, typically after product-market fit.
- Incubator – An organisation that helps startups grow by providing workspace, mentorship, and sometimes seed capital.
- Initial Public Offering (IPO) – When a private company offers shares to the public and lists on a stock exchange.
- Internal Rate of Return (IRR) – A performance metric used by VCs to evaluate the profitability of an investment.
- J-Curve – A graph showing initial losses followed by profits as VC investments mature.
- Key Performance Indicators (KPIs) – Metrics used to measure a startup’s performance (e.g., churn rate, ARR, MRR).
- Lead Investor – The VC that takes the primary role in a funding round, often setting terms and guiding due diligence.
- Lifetime Value (LTV) – Total revenue a startup expects to earn from a customer over the course of their relationship.
- Limited Partner (LP) – An investor in a VC fund, such as institutions, endowments, or high-net-worth individuals.
- Liquidation Overhang – The effect of accumulated investor liquidation preferences potentially reducing payouts for common shareholders during an exit.
- Liquidity Preference – The order and amount of returns investors get before founders/shareholders in an exit.
- Market Size (TAM/SAM/SOM) – Total, Serviceable, and Obtainable market metrics for evaluating startup potential.
- MOIC (Multiple on Invested Capital) – A metric showing how much return a VC gets on its investment (e.g., 3x MOIC = 3x return).
- Non-Dilutive Funding – Capital raised without giving up equity (e.g., grants, revenue-based financing).
- Operator Angel – An angel investor who is also a founder or experienced startup executive, often providing strategic support alongside capital.
- Option Pool – Shares reserved for future employees, usually carved out before a funding round.
- Pari Passu – A Latin term meaning “equal footing”—investors share equal rights in payouts.
- Pivot – A significant shift in a startup’s business model, product, or market focus.
- Platform Play – A strategy where the product acts as a base for multiple apps, services, or users.
- Post-Money Valuation – A company’s value after a funding round, including the new capital raised.
- Pre-Money Valuation – A company’s value before receiving new funding.
- Pre-Seed – The earliest round of funding, often from angels, founders, or friends/family.
- Pro Rata Rights – The right of existing investors to maintain their ownership percentage in future funding rounds.
- Product-Led Sales (PLS) – A sales strategy that blends product-led growth with enterprise sales tactics, using user behaviour data to trigger human outreach.
- Product-Market Fit (PMF) – The stage where a startup’s product meets strong market demand, evidenced by high user retention, satisfaction, and scalable growth.
- Retention Rate – The percentage of customers retained over a specific period, key for SaaS businesses.
- Revenue-Based Financing (RBF) – A form of non-dilutive funding where startups repay investors via a percentage of revenue, instead of giving up equity.
- Runway – How long a startup can continue operations before it runs out of cash, given its current burn rate.
- SAFE (Simple Agreement for Future Equity) – An early-stage investment agreement that converts into equity during a future priced round. SAFEs do not carry interest or have a maturity date, unlike convertible notes. Created by Y Combinator to simplify startup fundraising.
- Scalability – The potential for a startup to grow revenue quickly without a corresponding increase in costs.
- Secondary Sale – Sale of shares by existing shareholders (e.g., founders, early investors) rather than the company issuing new shares.
- Seed Round – The first formal round of funding raised to support product development and market entry.
- Series A/B/C – Successive rounds of venture funding, each typically larger and at a higher valuation.
- Shareholders’ Agreement (SHA) – It is a legal contract among a company’s shareholders that outlines their rights, responsibilities, and rules for ownership, management, and dispute resolution.
- Startup Studio – An organisation that systematically builds multiple startups in parallel or sequence using shared teams, capital, and infrastructure.
- Tech Stack (Stack) – Tools and technologies used to build and scale products.
- Term Sheet – A non-binding agreement outlining the key terms and conditions of a proposed VC investment.
- Tokenomics – The economic design of a crypto startup’s token, including supply mechanisms, utility, incentives, and governance.
- Unicorn – A privately held startup valued at over $1 billion.
- Unit Economics – Fundamental to understanding financial viability per customer.
- Usage-Based Pricing (UBP) – A pricing model where customers pay based on consumption rather than fixed plans, common in developer tools and cloud platforms.
- Valuation – The estimated worth of a startup, often based on future growth potential.
- Vesting – The process by which founders or employees earn equity over time.
- Waterfall – A payout structure showing how proceeds from an exit are distributed among stakeholders.
- Zebra – A sustainable, profitable alternative to unicorns.