Accelerator
Fixed-term programs that provide mentorship, valuable advice, and training for entrepreneurs. Often culminating in a Shark Tank-like pitching event to raise funds for their startup.
Accredited Investor
An individual or a business entity that meets the legal requirements for investment in a business venture.
Angel Investor
Investors who show up to fund startups at a very early stage and get them going.
Angel Round
A funding round that occurs early in the life cycle of a startup, involving a bunch of angel investors.
Bear Market
A prolonged period of falling stock prices, and negative market sentiment which may make it harder for private companies and startups to raise capital.
Board of Directors
The governing body of a company, often made up of those in the top management, that needs to sign off on all major decisions.
Bootstrapping
Starting and running a business without external investment that requires giving company shares.
Bull Market
The opposite of a bear market wherein investor sentiment is on a high, marked by rising stock prices and demand in private markets.
Capitalization Table
A table that details who has ownership in a company, listing all available shares including stock, convertible notes, warrants, and equity ownership grants.
Carry
A term used to describe “carried interest”, it refers to the percentage of profits that will go to a fund manager in case of a liquidity event for a startup.
Closing
The final stage in the investment process, where legal documents are signed and an investment becomes official.
Convertible Debt
Used interchangeably with convertible note, this form of debt is typically short-term and converts into company equity at a future date.
Dilution
Decrease in ownership percentage for existing shareholders when additional shares are issued to incoming investors during a new funding round.
Incubator
A program designed to help new startups get off the ground with expertise, workspace and financing. These are often funded by educational institutions and venture capital firms.
IPO
An Initial Public Offering (IPO) is when a private company offers a part of the company’s stock for sale to the public, and starts trading on an exchange.
Lead Investor
An individual or an organization who will lead a funding round and may also act on behalf of the other investors.
LP
In the context of venture capital and startups, limited partners or LPs are high net-worth individuals that provide the money to be invested and subsequently are the ones to gain most from the returns.
Liquidity Event
An acquisition, merger, initial public offering (IPO), or other action that allows existing investors in a company to cash out some or all of their ownership shares.
Post-Money Valuation
The value of a company, determined after receiving an external round of funding.
Pre-Money Valuation
Represents how much a company is worth before a funding round.
Preferred Stock
This differs from common stock such that it gives holders certain preferential rights over those that hold common stock.
Runway
Measure of how long can a startup work/function/run before needing to raise the next round of external funding.
Scalability
The ability to execute an idea or a process even as the number of customers increase exponentially, often without needing to increase the expenses in the same manner
Seed Round
The first round of financing for a startup. Funds raised in the seed round are usually meant to be spent on producing a prototype or a proof of concept.
Series A
The first major round of venture capital funding for a startup.
Series B/C/D/E
Subsequent funding rounds as the startup grows in size, revenue and market share.
Syndication
The practice of individual investors coming together to pool their funds and invest in a startup.
Term Sheet
A non-binding agreement designed to provide a layout of the basic terms and conditions of an investment, often used as legal documentation.
Unicorn
A startup with a valuation of over $1 billion.
VC
Short for Venture Capital, this form of investment comes from firms who invest large amounts of money into startups in return of equity, typically over a long timeframe.