Startup Glossary: Letter "R"

The R&D Tax Credit (Section 41) is a federal and state tax incentive allowing software startups and tech companies to offset payroll taxes and income tax liabilities using qualified research expenses.

Redemption Rights are provisions in a term sheet that grant investors the right to force the startup to repurchase their shares after a specified period.

Registration Rights are contract clauses requiring a startup to register its privately held shares with securities regulators, allowing investors to sell them publicly upon listing.

Remaining Value to Paid-In Capital (RVPI) is a venture capital performance metric measuring the current market value of a fund's unrealized portfolio relative to the capital paid in by investors.

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.

A Retention Cohort is a group of users who signed up for a product during the same period, tracked over time to measure retention rates.

Revenue Churn is the reduction in recurring revenue resulting from customer cancellations and downgrades over a specified period.

Revenue Projections are the forecasted sales numbers in a financial model based on GTM assumptions, historical traction, and growth calculations.

Revenue Recognition is an accounting principle specifying the conditions under which a startup can officially record cash receipts as earned revenue.

Revenue-Based Financing (RBF) is a non-dilutive funding model where a startup receives capital in exchange for a percentage of its ongoing gross revenues until a predetermined amount is repaid.

A Reverse Merger is a transaction where a private startup takes control of and merges with an existing public shell company to list its shares publicly.

Reverse Vesting is a mechanism where founders own their shares upfront, but the company retains the right to buy back unvested shares at cost if a founder leaves early.

Right of First Offer (ROFO) is a shareholder provision requiring a shareholder who wishes to sell stock to first offer those shares to the company or major investors on specified terms.

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.

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

The Rule of 40 is a software industry benchmark stating that a healthy SaaS company's combined growth rate and profit margin should equal or exceed 40%.

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.

The RVPI Ratio is a venture performance metric measuring the paper value of a fund's active portfolio relative to the capital paid in by investors.