Startup Glossary: A to Z Venture Capital Directory

An Accelerator is a fixed-term, cohort-based program that supports early-stage startups through mentoring, education, and seed investments.

An Acquisition occurs when a larger corporation purchases a startup, absorbing its assets, technology, talent, and customer base.

An Advisory Board is an informal body of industry experts who provide advice, mentorship, and networking contacts to founders without corporate voting rights.

An Alternative Investment is any asset class outside of traditional public equities, bonds, and cash, including venture capital, private equity, and real estate.

An Angel Investor is a high-net-worth individual who provides early-stage capital to startups, typically using their personal funds.

An Anti-Dilution Provision is a contract clause that protects early investors from dilution if the startup issues shares at a lower valuation in subsequent rounds.

ARR (Annual Recurring Revenue) is a key metric for subscription-based businesses representing the predictable recurring revenue generated by active customers over a year.

Average Revenue Per User (ARPU) is the amount of revenue generated by an active customer account over a specific timeframe (usually monthly or annually).

The Board of Directors is an elected body of individuals that represents the interests of shareholders, oversees the executive team, and votes on major corporate decisions.

Bootstrapping is the practice of building and growing a startup using only personal savings and initial sales revenue, without raising external venture capital.

A Bridge Round is a temporary funding round raised by a startup to extend its runway until it raises a larger institutional round.

Burn Multiple is a metric that evaluates a startup's efficiency by comparing its net burn rate to its net new ARR generation.

Burn Rate is the rate at which a startup spends its cash reserves, typically measured on a monthly basis.

CAC (Customer Acquisition Cost) is the total cost required to acquire a new customer, including all sales and marketing expenses.

A Cap Table (Capitalization Table) is a detailed spreadsheet or ledger that outlines a startup's equity ownership structure.

A Capital Call (or drawdown) is the process by which a venture capital firm requests its Limited Partners to transfer a portion of their committed capital to fund an investment or cover fees.

Carried Interest (or carry) is a share of the profits of a venture capital fund that is paid to the fund managers (GPs) as performance compensation.

Churn Rate is the percentage of customers or subscription revenue that a startup loses over a specified period.

A Clawback Provision is a legal clause in a venture capital fund agreement requiring the fund managers (GPs) to return excess carried interest if subsequent investments underperform.

A Cliff is a specific period at the beginning of a vesting schedule during which no equity is earned.

Cohort Analysis is the study of customer groups who share common characteristics (such as signup date) to track behavior and retention trends over time.

A Convertible Note is a debt instrument that converts into equity at a future date, typically in connection with a priced funding round.

Corporate Venture Capital (CVC) is the practice of large companies investing corporate funds directly into startup companies, often for strategic or synergy-driven goals.

A Cram Down is an extreme down round where the startup's valuation is reduced so severely that the ownership stakes of previous investors and founders are heavily diluted or practically wiped out.

Customer Retention Rate (CRR) measures the percentage of active customers a startup maintains over a specific period, showing customer loyalty.

A Decacorn is a privately held startup company valued at $10 billion or more, representing the top tier of scale milestones.

Dilution occurs when a startup issues new shares to investors or employees, reducing the ownership percentage of existing shareholders.

A Discount Rate is a clause in a SAFE or convertible note that gives the early investor a percentage discount on the share price of the next priced equity round.

Distributed to Paid-In Capital (DPI) measures the actual cash returns distributed to a fund's investors (LPs) relative to the total capital they have paid into the fund.

A Down Round occurs when a startup raises a new round of funding at a pre-money valuation that is lower than the post-money valuation of its previous round.

Drag-Along Rights are legal provisions in a shareholder agreement that allow a majority of shareholders to force the remaining minority shareholders to participate in the sale of the company.

A Drawdown is the actual transfer of committed capital from a fund's investors (LPs) to the fund managers (GPs) following a capital call.

Dry Powder refers to the cash reserves committed by Limited Partners to a venture capital firm that have not yet been deployed or invested in startups.

Due Diligence is the comprehensive investigation and audit of a startup conducted by investors before finalizing an investment.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric used to evaluate a company's operational profitability.

An Employee Stock Ownership Plan (ESOP) is a corporate structure that allows employees to acquire ownership interest in the company through stock options.

An Exit is the liquidity event through which founders and investors liquidate their ownership stakes in a startup to realize returns.

Fair Market Value (FMV) is the price that a share of common stock would sell for on the open market, as determined by an independent valuation.

A Family Office is a private wealth management firm that manages the investment portfolio and financial affairs of an ultra-high-net-worth family.

A General Partner (GP) is the managing partner of a venture capital firm who makes investment decisions, manages the fund, and takes on legal liability.

A Go-To-Market (GTM) strategy is a step-by-step plan specifying how a startup will launch a product, reach its target audience, and achieve competitive advantage.

Gross Margin is the percentage of revenue remaining after subtracting the cost of goods sold (COGS), showing the core profitability of a product.

Gross Merchandise Value (GMV) is the total dollar value of sales transactions processed through a marketplace platform over a given time period.

A Hectocorn is a privately held startup company valued at $100 billion or more, representing the absolute pinnacle of private market growth.

A Hurdle Rate is the minimum rate of return a venture capital fund must achieve for its investors before the fund managers (GPs) can begin collecting carried interest.

An Incubator is a collaborative program designed to help early-stage startup founders refine their ideas and build their MVP over an open-ended period.

Information Rights are contract clauses giving venture investors regular access to a startup's financial statements, budgets, and operational performance reports.

Internal Rate of Return (IRR) is the annualized rate of return earned on investments, factoring in the specific timing of all cash flows (drawdowns and distributions).

An IPO (Initial Public Offering) is the process by which a privately held startup lists its shares on a public stock exchange for sale to the public.

The J-Curve is a visual representation of a venture capital fund's net cash flow over time, showing negative returns in the early years followed by significant positive returns in the later years.

A Joint Venture (JV) is a strategic business arrangement where two or more independent companies pool resources to form a new, joint entity for a specific project or business activity.

A Key Performance Indicator (KPI) is a quantifiable metric used by startups to evaluate performance, track growth velocity, and report operational progress to board members and investors.

A Key Person Clause is a provision in a venture capital fund's agreement that prohibits the fund managers (GPs) from making new investments if designated key partners leave the firm.

A Lead Investor is the venture capital firm or individual investor who orchestrates and writes the largest check for a startup's funding round.

A Limited Partner (LP) is an investor who commits capital to a venture capital fund but does not participate in active management or day-to-day operations.

Liquidation Preference is a protective legal clause in a term sheet that determines the order and amount of payout to preferred shareholders relative to common shareholders in an exit.

LTV (Lifetime Value) is the total net revenue a startup expects to earn from a single customer over the entire duration of their relationship.

The LTV to CAC Ratio compares the lifetime value of a customer to the cost of acquiring them, measuring marketing and sales funnel efficiency.

A Management Fee is a recurring fee paid to fund managers to cover operational expenses such as salaries, travel, and deal sourcing, typically calculated as a percentage of committed capital.

A Micro VC is a venture capital fund with a relatively small pool of capital (typically under $50M), focused primarily on pre-seed and seed-stage investments.

A Minimum Viable Product (MVP) is the simplest usable version of a new product that allows a startup to collect the maximum amount of validated customer feedback with the least effort.

MRR (Monthly Recurring Revenue) is the total amount of predictable subscription revenue a startup expects to receive each month.

Multiple on Invested Capital (MOIC) is a performance metric that compares the total value of an investment (realized returns + current value) to the initial cost of the investment.

An NDA (Non-Disclosure Agreement) is a legally binding contract that restricts parties from sharing confidential information disclosed during discussions.

Net Margin (or net profit margin) is the ratio of net profits to total revenues, showing how much of each dollar earned translates into actual profit.

Net Revenue Retention (NRR) measures the percentage of recurring revenue retained from existing customers over a period, including upgrades and expansions but excluding new sales.

An Option Pool is a block of common stock reserved by a startup to recruit and incentivize future employees, advisors, and key contributors.

A Pitch Deck is a short, highly structured slide presentation used by founders to pitch their startup to prospective investors.

A Pivot is a fundamental shift in a startup's business strategy, product direction, target market, or monetization model based on feedback and market validation.

Post-Money Valuation is the calculated value of a startup immediately after a funding round is completed.

Pre-Money Valuation is the negotiated, estimated value of a startup before it receives a new round of investment.

Pre-Seed funding is the earliest stage of venture financing, typically occurring before a startup has a fully developed product or proven product-market fit.

Pro-Rata Rights give investors the legal right to participate in future funding rounds to maintain their ownership percentage in the startup.

Product-Led Growth (PLG) is a business model where product usage, adoption, and value are the primary drivers of customer acquisition, retention, and expansion.

Product-Market Fit (PMF) is the stage where a startup has built a product that successfully satisfies a strong market demand in a scalable way.

Qualified Small Business Stock (QSBS) is a US tax provision (Section 1202) that allows early startup investors and employees to exclude up to 100% of capital gains from federal taxes upon sale.

Restricted Stock Units (RSUs) are equity-based compensation where an employee is promised shares of company stock in the future, subject to vesting and liquidity conditions.

Right of First Refusal (ROFR) is a legal clause giving the startup (or its major investors) the right to purchase shares from a selling shareholder on the same terms before they can sell to an outsider.

Run Rate is the financial performance of a startup extrapolated over a future period (usually a year) based on current month performance.

Runway is the amount of time a startup can continue to operate before running out of cash, assuming no new revenue is generated.

A SAFE (Simple Agreement for Future Equity) Note is a financial contract created by Y Combinator that allows startups to raise capital without establishing an immediate valuation.

A Secondary Offering is a transaction where existing shareholders sell their shares directly to new investors, rather than the company issuing new shares.

A Seed Round is the first official equity funding stage for a startup, representing the initial capital used to demonstrate product-market fit.

Series A funding is the first major round of institutional equity financing, aimed at startups that have demonstrated product-market fit and are ready to scale.

Series B funding is designed to scale a startup past the initial growth phase, expanding its market reach, team size, and operations.

Series C funding is raised by highly successful, late-stage startups to accelerate scaling, fund acquisitions, or prepare for an exit (IPO/acquisition).

A Special Purpose Vehicle (SPV) is a legal entity created to pool capital from multiple individual investors to make a single investment in a specific startup.

The Strike Price (or exercise price) is the fixed price per share at which an employee has the right to purchase stock options in the future.

A Super Angel is a highly active angel investor who makes numerous early-stage investments, often operating with a similar volume and check size to micro-VC funds.

A Syndicate is a group of angel investors or smaller venture funds who pool their capital together to invest in a single startup.

Tag-Along Rights (co-sale rights) are legal protections for minority shareholders that allow them to join in a transaction if a majority shareholder sells their stake.

TAM (Total Addressable Market) is the total market demand or revenue opportunity available for a product or service if 100% market share is achieved.

A Term Sheet is a non-binding agreement that outlines the key financial and legal terms of a proposed investment round.

Total Value to Paid-In Capital (TVPI) is a performance metric for venture capital funds that measures the total value (realized returns + paper value) relative to the amount of capital paid in by investors.

Traction is concrete evidence of customer demand and product adoption, typically demonstrated through revenue growth, active user counts, or key pilot partnerships.

A Unicorn is a privately held startup company valued at $1 billion or more.

Unit Economics is the analysis of a startup's revenues and costs associated with a single customer or transaction unit.

A Valuation Cap is a protective term in a SAFE note or convertible note that establishes the maximum valuation at which the investment converts into equity.

Venture Capital (VC) is a form of private equity financing provided by institutional firms to high-growth startups with significant scale potential.

Venture Debt is a type of debt financing provided to venture-backed startups, designed to extend runway between equity rounds without causing additional dilution.

Vesting is the process by which founders and employees earn the right to own their allocated stock options or shares over a period of time.

Working Capital is the difference between a startup's current assets (like cash, receivables) and current liabilities (like payables, short-term debt), measuring operational liquidity.

XaaS (Anything-as-a-Service) is a collective term for the delivery of diverse technologies, products, or business operations as a cloud-hosted, subscription-based service.

YoY (Year-over-Year) is a growth metric that compares a financial or operational performance measure in a specific period to the exact same period in the previous year.

Zero-Based Budgeting (ZBB) is an accounting method where all startup expenses must be justified and approved from scratch for each new period, rather than adjusting the previous budget.

A Zombie Startup is a company that is earning enough revenue to survive operational costs but does not grow or scale, providing no realistic exit path for venture capital investors.

A 409A Valuation is an independent appraisal of a private startup's common stock value, required by IRS Section 409A to set tax-compliant option strike prices.