Startup & VC Glossary
76 terms founders, operators and investors actually use — fundraising, cap tables, metrics and the mechanics of a venture deal, in plain English.
Fundraising & Rounds
How capital actually gets raised — rounds, instruments and the mechanics of a raise.
Angel investor
An individual investing their own money into early startups, often ex-founders or operators.
Read →Bridge round
A small raise to extend runway between two larger rounds — a bridge to the next milestone.
Read →Convertible note
A loan that converts into equity at a later round — like a SAFE but with interest and a maturity date.
Read →Data room
The organised set of documents — financials, contracts, cap table, IP — you share with investors during diligence.
Read →Discount
A percentage break early SAFE/note holders get on the next round's price as a reward for backing you sooner.
Read →Down round
A raise at a lower valuation than your previous one.
Read →Due diligence
The investor's verification of your numbers, tech, legals and team before money moves.
Read →Lead investor
The investor who sets the terms and price of a round and usually takes the biggest cheque.
Read →Pre-money / Post-money valuation
Pre-money is what the company is worth before the new money goes in; post-money is pre-money plus the raise.
Read →Pre-seed
The first outside money, usually raised on an idea, a prototype and a team rather than real traction.
Read →Priced round
A raise where you agree a valuation and issue shares at that price, as opposed to a note or SAFE.
Read →Runway
How many months of cash you have left at your current burn rate.
Read →SAFE
A simple instrument that converts into shares at your next priced round, usually with a cap and/or discount.
Read →Seed
The round that funds the search for product-market fit — first hires, first revenue, first signs the thing works.
Read →Series A, B, C…
Successive priced rounds named alphabetically — each one funds a new stage of scaling.
Read →Term sheet
A short, mostly non-binding document setting out the key terms of an investment before the long-form legals.
Read →Up round
A raise at a higher valuation than the last one — the normal, healthy direction.
Read →Valuation cap
The maximum valuation at which a SAFE or note converts, protecting early investors if you raise the next round high.
Read →Cap Table & Equity
Who owns what — shares, options, dilution and the maths of ownership.
Cap table
The ledger of who owns what — every shareholder, their share class and their percentage.
Read →Common shares
The plain shares founders and employees hold, last in line behind preferred in a payout.
Read →Dilution
The drop in your ownership percentage each time the company issues new shares.
Read →ESS (Employee Share Scheme)
The Australian framework for giving staff equity, with specific tax rules for startups.
Read →Founder vesting
Founders' own shares vesting over time, so a co-founder who leaves early doesn't walk with a huge stake.
Read →Fully diluted
The share count assuming every option, SAFE and convertible has been exercised and converted.
Read →Option pool / ESOP
Equity set aside to grant to employees as options, usually 10–15% of the company.
Read →Preferred shares
The share class investors usually take, with extra rights over ordinary shares — preferences, votes, protections.
Read →Secondary
A sale of existing shares (often founder or early-investor stock) rather than new shares issued by the company.
Read →Vesting / cliff
Equity is earned over time (vesting); a cliff is an initial period you must pass before any of it is yours.
Read →Deal Terms & Legal
The clauses in a term sheet that decide control, downside and who gets paid first.
Anti-dilution
A clause that adjusts an investor's shares if you later raise at a lower price, protecting them in a down round.
Read →Board seat / observer
A right to a seat (and vote) on your board, or to observe without voting.
Read →Drag-along / tag-along
Drag-along lets a majority force others to join a sale; tag-along lets minorities join one on the same terms.
Read →Information rights
An investor's contractual right to regular financials and updates from the company.
Read →Liquidation preference
The rule that decides who gets paid first, and how much, when the company is sold.
Read →Participating preferred
A preference where the investor gets their money back AND shares in the rest — 'double dipping'.
Read →Pro rata rights
An investor's right to invest again in future rounds to maintain their ownership percentage.
Read →Right of first refusal
The right to match an offer before shares can be sold to an outside buyer.
Read →Vesting acceleration
Unvested equity vesting early on an event — single trigger on acquisition, double trigger on acquisition plus being let go.
Read →Metrics & Unit Economics
The numbers that tell you whether the business works — growth, retention and efficiency.
ARR / MRR
Recurring subscription revenue, annualised (ARR) or monthly (MRR) — the core SaaS growth metric.
Read →Bookings vs revenue
Bookings are contracts signed; revenue is what you've actually earned and can recognise over time.
Read →Burn rate
How much cash you lose each month. Net burn is spending minus revenue.
Read →CAC
The fully-loaded cost of acquiring one customer — sales and marketing spend divided by new customers won.
Read →Churn
The rate at which customers (logo churn) or revenue (revenue churn) leave over a period.
Read →Cohort analysis
Grouping customers by when they joined and tracking each group's behaviour over time.
Read →Default alive / default dead
Whether your current growth and burn get you to profitability before the cash runs out (alive) or not (dead).
Read →Gross margin
Revenue left after the direct cost of delivering your product, as a percentage.
Read →LTV
The total gross profit you expect from a customer across their whole relationship with you.
Read →LTV:CAC ratio
Lifetime value divided by acquisition cost — a quick read on whether your growth engine is profitable.
Read →Net revenue retention
Revenue this year from last year's customers, including upsells and minus churn — expressed as a percentage.
Read →Payback period
How many months of a customer's gross profit it takes to earn back what you spent acquiring them.
Read →Rule of 40
A SaaS health check: growth rate plus profit margin should clear 40%.
Read →VC & Fund Mechanics
How venture funds are built and how they make money — the investor's side of the table.
Carry
The share of a fund's profits the GPs keep — classically 20% — after returning capital to LPs.
Read →Conviction
How strongly an investor believes in a deal — enough to lead, price it and defend it internally.
Read →Deal flow
The stream of investment opportunities a fund sees.
Read →DPI / TVPI / IRR
Fund return measures — DPI is cash actually returned, TVPI includes paper value, IRR is the annualised rate.
Read →Dry powder
Committed capital a fund has raised but not yet invested.
Read →Follow-on
A fund investing again in a company it already backs, usually to defend ownership in a later round.
Read →Fund / vintage
A fund is a single pool of LP money invested over a few years; its vintage is the year it started.
Read →General partner (GP)
The partners who run a VC fund — they source deals, make investment decisions and sit on boards.
Read →Investment thesis
The view of the world that guides what a fund invests in — sector, stage, geography or a specific bet on the future.
Read →Limited partner (LP)
The investors in a VC fund — super funds, family offices, endowments, wealthy individuals — whose money the GPs deploy.
Read →Management fee
The annual fee (often ~2%) LPs pay GPs to operate the fund and pay salaries.
Read →Ownership target
The percentage of a company a fund aims to own, driving how big a cheque it needs to write.
Read →Portfolio construction
How a fund decides cheque sizes, ownership targets and number of bets so the maths can return the fund.
Read →Power law
The reality that a tiny number of investments return most of a fund — winners pay for everything else.
Read →Growth & Go-to-Market
Finding customers and a repeatable way to reach them.
Flywheel
A self-reinforcing loop where each turn makes the next easier — more users create more value that attracts more users.
Read →Go-to-market
How you reach customers and turn them into revenue — the channels, motion and pricing that get the product sold.
Read →Ideal customer profile
A precise description of the customer you serve best — the one who buys fastest, stays longest and pays most.
Read →Land and expand
Winning a small initial deal then growing the account over time with more seats, products or usage.
Read →Product-led growth
A motion where the product itself drives acquisition and expansion — free trials, self-serve sign-up, viral loops.
Read →Product-market fit
The point where you've built something a market genuinely wants and pulls out of you faster than you can supply it.
Read →TAM / SAM / SOM
Nested market sizes — total addressable (TAM), serviceable (SAM) and the share you can realistically win (SOM).
Read →Product & Building
The language of building the thing itself.
Moat
A durable advantage that makes you hard to copy — network effects, switching costs, brand, data or scale.
Read →MVP
The smallest thing you can build to test whether customers actually want what you think they want.
Read →North Star metric
The single measure that best captures the value you deliver to customers, used to align the whole team.
Read →Pivot
A deliberate change of direction — product, market or model — while keeping what you've learned.
Read →Technical debt
The future cost of shortcuts taken to ship fast now — code and decisions you'll have to revisit.
Read →Can't find a term, or want the real-world version? Ask the Network →
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