100 venture capital terms explained the way they actually work — mechanics, formulas, and worked examples, not dictionary definitions. Run the numbers yourself in the calculators.
A smaller, fast interim raise meant to extend runway until a larger priced round can be closed.
A short-term loan that converts into equity at a future financing round, carrying interest and a maturity date.
A percentage reduction applied to the next round's share price when a SAFE or note converts, rewarding early investors.
A financing round priced at a lower valuation than the company's previous round.
An unusually large single financing round, commonly defined as $100M or more.
A binding term sheet provision preventing the company from soliciting or negotiating with other investors for a set period.
A seed round assembled from many small checks and no single lead investor setting terms.
The company's value immediately after new investment capital is added, equal to pre-money plus the new round.
The agreed value of a company immediately before new investment capital is added.
A financing where investors buy preferred stock at an explicit price per share, setting a firm company valuation.
The contractual right for an existing investor to invest in future rounds to maintain their ownership percentage.
A contract that converts an investor's cash into equity at a future priced round, without interest or a maturity date.
The first significant institutional round of financing, typically used to reach product-market fit.
The first major priced venture round, typically raised once a company has demonstrated real product-market fit.
A non-binding document outlining the key economic and control terms of a proposed investment.
The maximum company valuation at which a SAFE or convertible note will convert into equity.
An independent appraisal of a private company's common stock fair market value, used to legally set employee option strike prices.
A provision that adjusts an investor's conversion price downward if the company later raises money at a lower valuation.
A formal position on a company's board of directors, typically granted to a lead investor as part of a financing round.
A provision letting a majority of shareholders force minority shareholders to join in an approved sale of the company.
The contractual right for an investor to receive regular financial statements and other company updates.
The right of preferred shareholders to be paid back before common shareholders when a company is sold or liquidated.
Shares reserved for future employee equity grants, typically created or expanded as part of a financing round.
Preferred stock that pays its liquidation preference and then also shares in remaining proceeds alongside common stock.
Veto rights held by preferred shareholders over specific major company actions, like a new financing or a sale.
The company's or existing investors' right to buy shares before a stockholder can sell them to an outside buyer.
A separate agreement granting an individual investor specific rights outside the main financing documents.
The right of minority shareholders to join a sale initiated by a major shareholder, on the same terms.
The schedule over which founders and employees earn full ownership of their equity grant, typically over four years.
A minimum period, typically one year, that must pass before any equity vests at all under a vesting schedule.
A right to purchase a company's stock at a fixed price in the future, often issued alongside venture debt.
A formal request from a fund's GP for LPs to wire a portion of their previously committed capital.
The share of a venture fund's profits paid to the general partner, typically 20%, after returning LP capital.
A fund performance metric measuring actual cash returned to investors relative to capital they've contributed.
A fund structure with no fixed end date, continuously reinvesting proceeds rather than winding down on a schedule.
An investment vehicle that invests in other venture funds rather than directly in startups.
A single portfolio company whose exit value alone returns the entire fund's committed capital.
The individual or entity that manages a venture fund, makes investment decisions, and bears unlimited liability for the fund.
The portion of a venture fund's capital contributed by the general partners themselves, alongside LP money.
The minimum annual return a fund must generate for LPs before the GP starts earning carried interest.
An annualized percentage return that accounts for the timing and size of all cash flows into and out of an investment.
The pattern of a venture fund's returns dipping negative early before rising sharply as exits materialize later.
An investor who commits capital to a venture fund but has no role in day-to-day investment decisions.
An annual fee, typically 2% of committed capital, that LPs pay to cover a venture fund's operating expenses.
The total value returned from an investment divided by the amount originally invested, ignoring timing.
A fund term allowing the GP to reinvest early distributions rather than immediately returning them to LPs.
The portion of a fund's total value still held in unrealized, unsold portfolio positions.
A standalone legal entity created to pool capital from multiple investors into a single company or deal.
A fund performance metric combining realized distributions and the current estimated value of unrealized holdings.
The annualized value of a company's recurring subscription revenue, the standard growth metric for SaaS businesses.
A capital-efficiency metric measuring how much cash a company burns to generate each dollar of new revenue.
The total average cost, including sales and marketing spend, to acquire one new paying customer.
The number of months it takes for the gross profit from a new customer to repay the cost of acquiring them.
The percentage of customers or revenue a company loses over a given period, typically measured monthly or annually.
A profitability metric showing earnings before interest, taxes, depreciation, and amortization as a percentage of revenue.
The percentage of revenue remaining after subtracting the direct costs of delivering a product or service.
The total gross profit a company expects to earn from a customer over the entire duration of their relationship.
The predictable recurring revenue a subscription business generates each month.
The percentage of recurring revenue retained and expanded from an existing customer cohort over a year, including upgrades and churn.
A SaaS benchmark stating that growth rate plus profit margin should together equal or exceed 40%.
The number of months a company can operate before running out of cash, at its current spending rate.
A sales efficiency metric measuring how much new recurring revenue a company generates per dollar of sales and marketing spend.
An acquisition made primarily to bring on a company's team, rather than for its product, revenue, or IP.
A way for a company to go public by listing existing shares directly on an exchange, without issuing new shares or using underwriters to set a price.
A contingent portion of an acquisition's purchase price, paid only if the acquired company hits agreed performance targets after the deal closes.
A portion of acquisition proceeds held by a neutral third party for a period, to cover potential post-closing claims.
The process of a private company selling shares to the public for the first time and listing on a stock exchange.
The multi-day series of investor presentations a company's management team gives just before an IPO to build demand and set price.
A contractual window after an IPO during which company insiders are barred from selling their shares.
The general category of deals in which one company combines with or purchases another, the most common venture exit path.
The sale of existing company shares from one shareholder to another, generating no new capital for the company itself.
A publicly traded shell company that raises capital to merge with a private company, taking it public without a traditional IPO.
An operating company that acquires a startup for reasons tied to its existing business, like product, technology, or talent.
A company-organized process letting many shareholders sell a portion of their shares to a buyer at the same time.
A tax filing that lets a founder or employee pay tax on restricted stock's value at grant, rather than as it vests.
A record of who owns what portion of a company, including all shareholders, options, warrants, and securities outstanding.
The default legal entity structure for US venture-backed startups, chosen for its well-established corporate law and investor familiarity.
The process of restructuring a foreign or non-Delaware company into a Delaware C-corp to raise US venture capital.
A share structure with two or more stock classes carrying different voting rights, often used to preserve founder control.
The formal, board-approved plan governing how a company grants equity compensation to employees and other eligible recipients.
A vesting schedule applied to founders' own shares, protecting the company and remaining co-founders if one leaves early.
The two US stock option types — incentive stock options get favorable tax treatment for employees; non-qualified options are more flexible but taxed less favorably.
The defined order in which exit or liquidation proceeds are distributed across a company's different classes of stockholders.
A contractual right to a cash bonus tied to company value, without granting actual company shares.
A tax provision letting eligible startup shareholders exclude a large portion of capital gains from federal tax on a sale.
A promise to deliver company shares upon vesting, more common at later-stage and public companies than early-stage startups.
The right to purchase company shares at a fixed strike price, typically granted to employees as compensation and earned through vesting.
A fixed-term program that provides early-stage startups with a small investment, mentorship, and structure in exchange for equity.
An individual who invests their own personal capital into early-stage startups, often at the earliest, highest-risk stage.
A venture investment arm operated by an established company, investing corporate capital into startups for both financial and strategic returns.
An investor that participates in both private late-stage venture rounds and public equity markets.
A privately held startup valued at $10 billion or more, ten times the unicorn threshold.
The total capital venture funds have raised from LPs but not yet deployed into investments.
A private wealth management firm dedicated to managing the assets and investments of a single wealthy family.
A small venture capital fund, typically under $50M, focused primarily on seed and pre-seed stage investing.
A non-dilutive funding model where a company repays capital as a fixed percentage of ongoing revenue rather than fixed loan payments.
A venture fund managed by a single general partner rather than a traditional partnership of multiple investors.
A state-owned investment fund that deploys national capital, increasingly including significant allocations into venture and growth-stage deals.
A privately held startup valued at $1 billion or more.
A loan extended to venture-backed startups, typically alongside an equity round, that supplements capital without adding significant dilution.