Startup Glossary: Letter "S"

The SaaS Magic Number is a sales efficiency metric that compares growth in Monthly Recurring Revenue against sales and marketing expenses.

The SaaS Quick Ratio is a metric that evaluates a subscription startup's growth efficiency by comparing new and expansion revenue gains against churn and contraction losses.

A SAFE Agreement (Simple Agreement for Future Equity) is a flexible financing contract created by Y Combinator that grants investors the right to convert their capital into equity during future priced rounds.

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.

Sales-Led Growth (SLG) is a business model where outbound sales reps and account executives act as the primary drivers of customer acquisition and expansion.

The Sarbanes-Oxley Act (SOX) is a US federal law establishing strict financial reporting and internal control mandates for public corporations to prevent fraud.

Seat-Based Pricing is a monetization model where customers pay a recurring fee for each active user account (seat) registered in the software.

SEC Compliance represents a startup's adherence to the rules, registration mandates, and disclosure laws enforced by the US Securities and Exchange Commission.

A Secondary Market is a platform or network where investors buy and sell existing shares of private companies directly from other shareholders rather than the issuer.

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

Secondary Shares represent existing stock sold by current shareholders (such as founders, early employees, or early investors) to third-party buyers rather than new equity issued directly by the company.

Section 83(b) Tax Election is a US tax provision allowing startup founders and early employees to pay capital gains taxes on the fair market value of equity at the time of grant rather than when shares vest over time.

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).

Series D funding is a late-stage venture capital round raised by mature startups to fund major expansions, support acquisitions, or resolve recapitalization needs.

Series E funding is an ultra-late-stage venture round typically raised by pre-IPO companies requiring additional capital to support high-growth operations.

Series F funding is a late-stage private equity round raised by massive, pre-IPO tech companies (growth-stage giants) to finalize market dominance before listing.

Serviceable Addressable Market (SAM) is the specific portion of the Total Addressable Market that a startup's products can realistically target and serve based on geographic and product constraints.

Serviceable Obtainable Market (SOM) is the specific percentage of the Serviceable Addressable Market that a startup expects to capture in the short term, factoring in competitor dynamics and resources.

A Shareholder Agreement is a contract between the shareholders of a startup that outlines voting rights, transfer restrictions, and board seats.

Single-Trigger Acceleration is an equity clause that accelerates vesting immediately upon a change of control (acquisition), regardless of whether the employee remains with the company.

A Special Purpose Acquisition Company (SPAC) is a publicly traded shell company created to acquire a private startup, taking it public through a merger.

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.

Stealth Mode is the practice of keeping a startup's product, technology, or business model secret from the public and competitors.

A Stock Purchase Agreement (SPA) is the definitive contract governing the purchase and sale of startup stock by investors, containing representations and warranties.

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.

Sweat Equity is a non-monetary contribution to a startup, representing the value of labor, time, and expertise provided by founders or early employees in exchange for equity.

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

A Syndicate Lead is the individual investor or angel who organizes an investment syndicate, conducts due diligence, negotiates terms, and manages the SPV.