Venture Capital Glossary

Annual Recurring Revenue — the annualized value of a company's recurring subscription revenue, the primary top-line metric for SaaS businesses.

A valuation metric expressing a company's enterprise value as a multiple of its Annual Recurring Revenue — the primary valuation benchmark for high-growth SaaS businesses.

A fixed-term program that provides startups with mentorship, resources, and a small amount of capital in exchange for equity, culminating in a demo day.

An individual or entity that meets the SEC's financial thresholds to invest in private securities — typically a net worth over $1M or annual income over $200K.

The amount of capital an LP commits to a specific asset class or fund — e.g., a university endowment allocating 15% of its portfolio to venture capital.

Investment categories outside traditional stocks and bonds — including venture capital, private equity, hedge funds, real estate, and commodities.

The first and typically largest limited partner in a new fund, whose commitment signals credibility and helps attract subsequent investors.

A high-net-worth individual who invests their personal capital in early-stage startups, typically at the pre-seed or seed stage.

A group of angel investors who pool capital to co-invest in deals together, typically organized through platforms like AngelList.

A contractual protection for investors that adjusts their share price downward if the company raises future capital at a lower valuation.

The defining characteristic of venture investing: limited downside (lose the investment) with potentially unlimited upside (100x+ returns).

A for-profit company certified by B Lab for meeting rigorous social and environmental standards — relevant for impact-focused VC investments.

In SaaS, the total value of contracted but not yet recognized revenue — a leading indicator of future ARR growth.

A performance standard used to evaluate a fund's returns — typically the median or top-quartile IRR among peer funds of the same vintage year.

A fund structure where LPs commit capital before knowing which specific investments will be made — the standard structure for most VC funds.

A strategy of prioritizing rapid growth over efficiency to capture market dominance before competitors, at the cost of short-term profitability.

A non-voting participant in board meetings, typically a smaller investor, who can attend and speak but has no voting rights.

The governing body of a corporation, responsible for major strategic decisions, hiring/firing the CEO, and representing shareholders.

The carrying value of a portfolio investment on a fund's books — usually the last round valuation or a write-down if performance has deteriorated.

Building a startup using only personal savings and revenue generated by the business — without external investment.

A small fundraise between larger priced rounds, typically done via SAFE or convertible note to extend runway to a key milestone.

A market phase where asset valuations significantly exceed fundamental value, driven by speculation, excess capital, and narrative rather than earnings or cash flows.

A founder or operator actively creating products, companies, or communities — used in VC circles to describe people who make things rather than advise on them.

Net burn divided by net new ARR — a measure of capital efficiency. A burn multiple below 1.5x is considered healthy for growth-stage SaaS companies.

The rate at which a company spends its cash reserves each month. Gross burn is total spend; net burn is spend minus revenue.

Customer Acquisition Cost — the total sales and marketing spend required to acquire one new customer.

The number of months required to recover the cost of acquiring a customer from the gross profit that customer generates — a core measure of go-to-market efficiency.

The portion of an LP's committed capital that the GP has actually drawn down through capital calls — as opposed to committed but not yet transferred capital.

A spreadsheet showing the ownership stakes of all shareholders in a company — founders, investors, and employees with options.

A request from a VC fund GP to LPs to transfer a portion of their committed capital for deployment into investments.

The measure of how effectively a startup converts invested capital into growth — lower burn for equivalent growth indicates higher capital efficiency.

The share of a fund's profits (typically 20%) that goes to the general partners as performance compensation, paid after returning all LP capital.

A clause in a fund's waterfall allowing GPs to receive 100% of distributions until they've caught up to their target carry percentage after LPs receive their preferred return.

A go-to-market strategy where a company positions itself as defining an entirely new market category rather than competing in an existing one.

The rate at which customers cancel or fail to renew their subscriptions. High churn is a critical warning sign for SaaS businesses.

A provision requiring GPs to return previously distributed carry to LPs if the fund ultimately underperforms — protecting LPs from overpaying carry on early exits.

The minimum tenure required before any equity vests — typically 12 months, after which the cliff amount vests all at once.

Direct investment by an LP alongside a VC fund in a specific portfolio company — often offered as a perk to large LPs.

Tracking the behavior of a specific group of customers (cohort) acquired in the same period over time — the gold standard for measuring retention.

The total amount LPs have legally agreed to invest in a fund — distinct from called capital (money already transferred to the fund).

The basic ownership shares in a company held by founders and employees — ranking behind preferred stock in liquidation and carrying fewer special rights.

The risk of having too large a portion of a fund's capital in a single investment or sector, increasing vulnerability to that investment's failure.

The right of preferred stockholders to convert their preferred shares into common stock, typically at a 1:1 ratio.

A short-term debt instrument that converts to equity at a future priced round, with an interest rate and maturity date.

The standard equity instrument issued to VC investors — preferred stock that can be converted to common stock, typically at IPO or acquisition.

A venture capital arm of a large corporation that invests in startups for strategic and financial returns — e.g., Google Ventures, Salesforce Ventures, Intel Capital.

A highly dilutive financing round where new investors receive favorable terms that significantly dilute existing shareholders who don't participate.

Distributions to Paid-In Capital — the ratio of cash returned to LPs versus capital invested. DPI above 1x means LPs have gotten their money back.

The stage in fund distributions where GPs begin receiving carried interest after LPs have received back their full invested capital plus preferred return.

A secure online repository where startups share sensitive business documents with potential investors during due diligence.

A temporary recovery in a declining company's performance or valuation before it continues downward — a false signal of recovery.

The pipeline of investment opportunities a VC firm sees — more and better-quality deal flow is a key competitive advantage for top firms.

A private company valued at $10 billion or more — a step above unicorn status.

A company that would reach profitability on its current trajectory before running out of cash — without needing to raise additional capital.

A company that will run out of cash before reaching profitability if it maintains its current trajectory — the opposite of default alive.

The culminating event of an accelerator program where startups pitch their companies to a room of investors.

The reduction in an existing shareholder's ownership percentage when a company issues new shares through fundraising or option grants.

Contractual mechanisms that protect investors from having their ownership percentage reduced by future issuances — primarily anti-dilution provisions and pro-rata rights.

In SAFE/convertible note context: the percentage reduction applied to the next round's price to reward early investors. Typically 15-20%.

A portfolio company in financial difficulty — low runway, declining metrics, or inability to raise additional capital at acceptable terms.

A funding round where a startup raises capital at a lower valuation than its previous round, triggering dilution and anti-dilution provisions.

Shorthand for drag-along rights — allowing majority shareholders to compel minority shareholders to vote in favor of a sale.

A provision allowing majority shareholders to force minority shareholders to vote in favor of an acquisition or other liquidity event.

Cash reserves that a VC fund has committed but not yet deployed — available for new investments or follow-on rounds.

The investigative process a VC conducts before investing — reviewing financials, references, technology, legal documents, and market assumptions.

Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow and profitability, especially relevant for growth equity and PE deals.

A valuation metric expressing a company's value as a multiple of its EBITDA — commonly used in growth equity and private equity but less in early-stage VC.

Environmental, Social, and Governance — criteria used by impact investors to evaluate companies beyond purely financial metrics.

The investment phase covering pre-seed through Series A, when companies are building their initial product and proving out their business model.

A first-time or early-vintage fund manager, typically raising Fund I or Fund II, often with differentiated strategy, diverse backgrounds, or access to underserved markets.

The total value of a company including equity and net debt — a more complete measure of company value than market cap alone.

An experienced founder or executive temporarily based at a VC firm to evaluate deals, support portfolio companies, and develop their next venture.

Ownership in a company, represented as shares. In venture capital, equity is the primary mechanism through which investors participate in a company's upside.

Funds held by a neutral third party in an acquisition to cover potential post-closing liabilities — sellers receive escrowed funds after a holdback period.

The price per share at which an option holder can purchase shares — same as strike price, set at fair market value on the grant date.

A liquidity event that allows investors to realize returns on their investment — typically an IPO or acquisition.

Additional recurring revenue generated from existing customers through upsells, cross-sells, seat additions, or usage growth — a key driver of net revenue retention above 100%.

An independent appraisal of a private company's fair market value of common stock, required by IRS rules to set the exercise price of employee stock options.

Fear of Missing Out — the psychological phenomenon in VC where investors rush to invest in hyped deals to avoid being left out of potentially large returns.

The estimated market value of an investment, used by VC funds to mark portfolio companies on their books between financing events.

A private wealth management organization serving ultra-high-net-worth families — many family offices allocate to VC funds or invest directly in startups.

An acquirer — typically private equity — focused purely on investment returns rather than operational or strategic synergies with the acquired company.

A self-reinforcing growth loop where each element of the business drives the next — the more the flywheel spins, the harder it becomes to stop.

Additional capital invested by an existing investor in a later funding round to maintain or increase their ownership stake.

A deal structure or investor with minimal control provisions — founders retain more board seats, decision-making power, and downside protection than in traditional VC terms.

The phenomenon where successful founders receive investment, media coverage, and credibility for new ventures based primarily on their previous success rather than the merits of the current idea.

A management philosophy where founders stay deeply involved in operational decisions rather than delegating to professional managers — popularized by Paul Graham's 2024 essay.

The degree to which a founder's background, expertise, and personal connection to a problem uniquely position them to solve it.

Cash generated by a business after accounting for capital expenditures — a measure of true financial health and the basis for many valuation models.

The most aggressive anti-dilution provision — resets an investor's conversion price to match any lower future round price, regardless of how many shares are issued.

The total number of shares outstanding assuming all options, warrants, and convertible securities have been exercised — representing true economic ownership.

Preferred stock that participates in both its liquidation preference AND the remaining proceeds after conversion — the most investor-favorable liquidation structure.

The planned duration of a VC fund, typically 10 years — with an investment period of 3-5 years and a harvest period of 5-7 years.

A portfolio investment that by itself returns the fund's entire invested capital — typically requiring a 10-30x return depending on fund size and ownership.

The total capital committed by LPs to a venture fund, which determines the fund's investment capacity and check size range.

An investment vehicle that invests in a portfolio of VC funds rather than directly in companies, providing LP exposure to the VC asset class with diversification.

Generally Accepted Accounting Principles — the standard accounting framework required for audited financial statements in the US.

The managing partner(s) of a venture fund — responsible for investment decisions, fund management, and bearing unlimited liability for fund obligations.

Publicly advertising a fundraise to non-preexisting relationships — allowed under Rule 506(c) for funds raising from accredited investors only.

A company's strategy for reaching customers and generating revenue — including sales motion, pricing, channel selection, and marketing approach.

Revenue minus cost of goods sold (COGS), expressed as a percentage — a critical indicator of business model quality and scalability.

The percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue from upsells — measures pure churn.

A type of private equity investment targeting established, profitable or near-profitable companies looking for capital to accelerate growth without full ownership change.

Rapid, data-driven experimentation to find scalable, low-cost user acquisition strategies — associated with early-stage consumer tech companies.

The maximum amount a fund will raise — once the hard cap is reached, no additional LP commitments are accepted.

A legally binding LP commitment to a fund, as opposed to a soft commitment which is an informal expression of interest that carries no legal obligation.

A fundraise with multiple competing investors, often closing above target amount and at better-than-expected valuations for the startup.

The minimum return LPs must receive before the GP starts collecting carried interest — typically 7-8% annually.

Initial Public Offering — the process by which a private company sells shares to the public on a stock exchange for the first time.

Periods when public market conditions are favorable for technology IPOs — characterized by investor appetite, high valuations, and strong aftermarket performance.

Internal Rate of Return — the annualized return on an investment, accounting for the timing of cash flows. Top-quartile VC funds target net IRRs above 20-25%.

Investing with the explicit intention of generating positive social or environmental impact alongside financial returns.

Distribution of actual portfolio company shares to LPs (rather than cash) when a portfolio company goes public.

An organization that supports very early-stage startups with resources, mentorship, and sometimes space — typically without a defined program end date, unlike accelerators.

A board member who is not affiliated with the company's investors or management, providing neutral perspective on governance decisions.

Contractual obligations requiring a startup to share financial statements and other operational data with investors on a regular basis.

A formal internal document written by a VC analyst or associate summarizing an investment thesis and recommendation for a potential portfolio company.

The first phase of a fund's life (typically years 1-5) during which the GP actively deploys capital into new investments.

The typical return pattern of a VC fund: negative returns early (fees, early losses) followed by positive returns as successful companies mature and exit.

A fund provision allowing LPs to suspend further capital contributions or terminate the fund if a named key GP leaves the fund.

A committee of selected LPs that reviews and approves potential conflicts of interest and other sensitive fund decisions.

The total revenue a business expects to earn from a customer over the entire duration of the relationship.

Venture investments in mature, scaled companies — typically Series C and beyond — that have proven business models and are approaching IPO or acquisition.

The investor that sets the terms for a funding round, invests the largest check, and often takes a board seat.

A preliminary agreement outlining the key terms of a proposed transaction — similar to a term sheet but more commonly used in M&A contexts.

An investor in a venture fund who provides capital but has limited liability and no role in investment decisions.

Any transaction that triggers distribution of proceeds to shareholders — including company sale, merger, or dissolution.

A provision ensuring investors receive their capital (or a multiple) back before other shareholders in a sale or liquidation.

Any transaction that allows shareholders — founders, employees, and investors — to convert equity in a private company into cash.

The post-IPO period (typically 180 days) during which insiders and pre-IPO investors are prohibited from selling their shares.

Mergers and Acquisitions — the consolidation of companies through purchase, merger, or other corporate transactions. A primary exit path for VC-backed companies.

Multiple on Invested Capital — the gross return multiple on an investment: total value returned divided by capital invested.

Monthly Recurring Revenue — the predictable monthly revenue from subscriptions. The foundational SaaS metric used to track growth momentum.

Minimum Viable Product — the simplest version of a product that allows a team to collect validated learning about customers with the least effort.

A SaaS efficiency metric measuring how much ARR growth is generated per dollar of sales and marketing spend — above 0.75 is generally considered efficient.

The annual fee (typically 2% of committed capital) charged by a VC fund to cover operating expenses including salaries, rent, and travel.

Adjusting the carrying value of portfolio investments to reflect current market prices or estimated fair values.

A visual overview of a startup ecosystem or market segment — mapping companies by category, stage, geography, or other characteristics.

Late-stage private financing that bridges a company toward an IPO, combining debt and equity characteristics with significant downside protection.

A venture fund typically under $100M focused on early-stage seed and pre-seed investments — often run by a solo GP or small team.

A specific, measurable achievement that a startup must reach to unlock additional funding, demonstrate progress, or meet investor expectations.

A founder motivated primarily by solving a specific problem rather than financial gain — considered more credible and resilient by many investors.

An investment style that prioritizes investing in companies showing strong recent growth, regardless of valuation — the opposite of value investing.

Net Asset Value — the total value of a fund's portfolio (realized + unrealized) minus liabilities, used to report fund performance to LPs.

Backing companies based primarily on compelling stories about the future rather than current metrics or fundamentals — common in early-stage venture but criticized when applied to later stages.

The actual cash a company loses each month after accounting for all incoming revenue — total monthly expenses minus total monthly revenue.

The percentage of revenue retained from existing customers year-over-year, including upsells and expansions. NRR above 100% means existing customers are growing.

The phenomenon where a product or service becomes more valuable as more people use it — one of the most powerful competitive moats in technology.

A provision in a term sheet that prevents a startup from soliciting competing offers from other investors for a defined period — typically 30-60 days.

Capital sources that don't require giving up equity — including grants, loans, revenue-based financing, and government programs.

A legal agreement preventing parties from sharing confidential information shared during discussions — less common in early-stage VC, more common in later-stage and M&A.

The governing document for an LLC that outlines ownership, management structure, profit distribution, and member rights.

An experienced executive or founder who has run operations inside a company — often contrasted with pure investors, and increasingly sought after as VC partners.

A separate, dedicated pool of capital raised by a VC firm specifically to make larger follow-on investments in its best-performing portfolio companies.

A block of shares reserved for future employee equity grants, typically 10-20% of the fully diluted cap table.

A fundraising round that receives more investor commitments than the company (or fund) is seeking to raise — creating scarcity and competitive pressure.

Latin for 'equal step' — describes securities or investors treated equally, with no one having priority over others in the same class.

A funding round with many small investors and no clear lead investor — often assembled quickly during hot markets, with minimal due diligence.

A provision requiring existing investors to participate in future down rounds or lose certain rights — typically conversion rights on preferred stock.

The time required for a company to recover its Customer Acquisition Cost (CAC) from the gross margin generated by that customer.

In sales: the total value of potential deals in progress. In VC fundraising: the pool of potential investors a startup is engaging.

A slide presentation used by founders to communicate their business to potential investors, typically 10-15 slides covering problem, solution, market, traction, and team.

A deliberate, strategic shift in a startup's product, market, business model, or core technology in response to evidence that the current direction isn't working.

In VC: a team or set of services provided by a fund to its portfolio companies — talent, marketing, BD, technical resources beyond just capital.

A startup that a VC fund has invested in and holds in its portfolio.

The strategy a VC fund uses to deploy capital across investments — balancing number of investments, stage, sector, check size, and reserve allocation.

A SAFE where the valuation cap is calculated on a post-money basis, giving investors more predictable ownership percentages.

A company's valuation immediately after a funding round closes, including the new capital raised.

The mathematical principle underlying VC returns: a small number of exceptional investments generate most of a fund's returns, while most investments return little or nothing.

A company's valuation before a funding round closes — the negotiated price of the company excluding the new capital being raised.

The earliest stage of startup funding — typically $250K-$2M raised before having a product or significant traction, often from angels and pre-seed funds.

The minimum annual return (typically 6-8%) LPs receive before the GP begins taking carried interest — also called a hurdle rate.

The class of stock issued to venture investors, carrying special rights including liquidation preferences, anti-dilution protection, and governance provisions not available to common stockholders.

A financing round that establishes a specific per-share price and valuation — as opposed to a convertible note or SAFE which convert at a future price.

A broad category of investment in private companies — encompassing venture capital, growth equity, leveraged buyouts, and distressed investing.

The right of existing investors to maintain their ownership percentage in future funding rounds by investing their proportional share.

The stage where a startup's product strongly satisfies a genuine market need — characterized by organic growth, strong retention, and users who would be 'very disappointed' if the product disappeared.

A projected capitalization table showing post-round ownership percentages after a proposed financing — used to model the dilution impact of a new investment.

Contractual veto rights held by preferred stockholders over major company decisions like raising capital, selling the company, or amending the charter.

Qualified Small Business Stock — a tax exclusion allowing founders and investors to exclude up to $10M (or 10x basis) of capital gains on qualifying startup investments.

An investor with $5M+ in investments — a higher standard than accredited investor, required for Section 3(c)(7) funds targeting institutional LP bases.

A SaaS growth efficiency metric comparing new and expansion revenue against churned and contracted revenue — above 4 is considered excellent for early-stage companies.

An aggressive anti-dilution mechanism that resets an investor's conversion price to the lower of the original price or any subsequent lower price — also called full ratchet.

The conversion of portfolio investment value into actual cash through an exit event — IPO, acquisition, or secondary sale.

A restructuring of a company's capital structure — changing the mix of equity and debt, or renegotiating existing equity terms.

A fund structure provision allowing GPs to reinvest early capital returns back into new portfolio investments rather than distributing them immediately to LPs.

Conversations with former colleagues, investors, and customers of a founder to verify their character, skills, and track record before investing.

The SEC safe harbor allowing companies to raise capital from accredited investors without registering the securities offering — the legal basis for most private financings.

Statements of fact made by a seller in an M&A transaction that the buyer relies on — breaches can result in indemnification obligations.

Funds set aside by a VC fund for follow-on investments in existing portfolio companies rather than new investments.

A valuation metric expressing company value as a multiple of revenue — used when EBITDA multiples aren't applicable because the company is pre-profit or early-stage.

A non-dilutive funding structure where investors receive a percentage of monthly revenue until a predetermined multiple is repaid.

A contractual right allowing a company (or existing investors) to purchase shares before a shareholder sells them to an outside party.

Return on investment measured relative to the risk taken — a 3x return in venture capital represents a different risk-adjusted return than a 3x return in bonds.

A continuously open venture fund structure where investors subscribe quarterly rather than committing the full amount upfront to a traditional 10-year closed-end fund.

A discrete fundraising event where a company raises a specific amount of capital at a set valuation — named sequentially (Seed, Series A, B, C, etc.).

A benchmark for SaaS company health stating that a company's revenue growth rate plus its profit margin should equal or exceed 40%.

The number of months a company can continue operating at its current burn rate before running out of cash.

Simple Agreement for Future Equity — a contract giving investors the right to receive equity in a future priced round, without debt mechanics.

Small Business Investment Company — an SBIC license allows VC funds to borrow government money (3:1 leverage) to invest in qualifying small businesses.

Special Purpose Acquisition Company — a shell company that raises capital through a public offering specifically to acquire a private company, taking it public without a traditional IPO process.

Special Purpose Vehicle — a single-purpose investment entity that allows a group of investors to co-invest in a specific deal through a unified cap table entry.

Software as a Service — cloud-delivered software accessed via subscription, generating recurring revenue. The dominant business model in modern enterprise software.

A program where VC firms give capital to trusted individuals — founders, operators, academics — to source and invest in early-stage deals on behalf of the fund.

The market for buying and selling existing private company shares or LP interests in VC funds — providing liquidity before traditional exit events.

The sale of existing shares by founders, employees, or early investors to new investors without the company issuing new shares.

An additional fundraise at the same terms as a previous seed round — used when a company needs more capital before being ready for a Series A.

The first meaningful institutional funding round for a startup, typically $500K-$5M, used to build an initial product and validate the business model.

The first significant priced venture round, typically $5-20M, raised once a startup has demonstrated initial product-market fit and a scalable business model.

A growth-stage venture round, typically $15-50M, raised to scale a business that has proven product-market fit and is ready to expand aggressively.

A later-stage venture round typically raised by companies with proven growth, used to scale aggressively, enter new markets, or position for an eventual IPO or large acquisition.

Releasing product updates, features, or fixes to users — used in startup culture to signal execution velocity and bias toward action over planning.

A supplemental agreement between a GP and specific LP modifying standard fund terms — granting MFN rights, co-investment rights, or fee discounts for that LP.

The distinction between metrics and signals that reflect genuine business health versus vanity metrics that look impressive but don't predict outcomes.

The market signal sent by a VC's actions — most importantly, whether an existing investor participates (positive) or declines (negative) in a follow-on round.

A verbal or informal commitment from an investor to participate in a round — not legally binding, but typically considered a moral commitment.

A venture capital firm run by a single general partner rather than a partnership of multiple GPs — increasingly common at the seed stage.

Capital raised by early-stage companies from angels, venture funds, accelerators, or other investors to build products, hire teams, and grow revenue.

The right to purchase company stock at a fixed price (strike price) in the future — the primary equity compensation tool for startup employees.

An acquisition by a company seeking operational synergy, market access, technology, or talent — as opposed to a financial buyer seeking pure investment returns.

A corporate or institutional investor that invests for strategic reasons (partnerships, market intelligence, acquisition pipeline) in addition to financial returns.

The price at which an option holder can purchase company shares — set at fair market value at time of grant, as determined by a 409A valuation.

A prolific individual angel investor who writes many checks across numerous startups, often at institutional scale — blurring the line between angels and micro-VCs.

A group of investors co-investing in a deal together, often organized by a lead investor who does diligence and brings in other investors at the same terms.

Total Addressable Market — the total revenue opportunity available if a company achieved 100% market share in its target market.

A narrative used by startups to argue that their addressable market is larger than it appears today — either because they will expand into adjacent markets or because they will grow the market itself.

Total Value to Paid-In Capital — a fund performance metric representing total value (realized + unrealized) relative to capital invested by LPs.

Rights allowing minority shareholders to join a sale when majority shareholders sell their shares, ensuring equal treatment in a transaction.

A prolonged downturn in venture funding, startup valuations, and tech hiring — characterized by layoffs, down rounds, and reduced VC activity.

A structured liquidity event allowing employees and shareholders to sell shares to new investors at a fixed price — often done alongside a new primary financing round.

A non-binding document outlining the key economic and governance terms of a proposed investment, serving as the basis for final legal documents.

A VC fund's core investment hypothesis — defining what kinds of companies they invest in, why those companies will succeed, and why this fund is positioned to find them.

An investment approach starting with macro themes, sectors, or trends and then identifying companies positioned to benefit — opposite of bottom-up (company-first).

Measurable evidence that a startup's product is gaining market adoption — revenue growth, user growth, retention, and engagement are common traction metrics.

A portion of a larger investment, released upon meeting specific milestones — used in milestone-based financing to reduce investor risk.

An event that activates a contractual provision — such as anti-dilution adjustments triggered by a down round, or acceleration triggered by an acquisition.

A private startup valued at $1 billion or more. The term was coined by Aileen Lee in 2013 to describe the rarity of such companies.

The direct revenues and costs associated with a single customer or unit — used to assess whether a business can be profitable at scale.

Growth achieved through subsidized unit economics — where each new customer or transaction loses money — justified by the expectation of future scale or market dominance.

The current estimated value of portfolio investments that have not yet been exited — also called paper gains or unrealized gains.

A financing round where a startup raises at a higher valuation than its previous round — the normal, positive progression of a healthy startup.

The estimated worth of a company, used to determine investor ownership percentages and share pricing in a funding round.

The maximum valuation at which a SAFE or convertible note converts into equity, protecting early investors from high Series A prices.

The speed of execution across product development, hiring, and fundraising — used as a qualitative signal of a startup team's operating rhythm and competitive edge.

A form of private equity financing provided to early-stage, high-growth companies in exchange for equity, with the expectation of outsized returns from a few breakout investments.

A professional investor who deploys capital from a managed fund into high-growth private companies in exchange for equity, targeting outsized financial returns.

Debt financing for VC-backed startups, typically structured as a term loan with warrants, used to extend runway without additional equity dilution.

A part-time senior advisor or investor at a VC firm who sources deals and provides expertise without being a full-time general partner.

The operational team inside a VC fund that provides non-capital support to portfolio companies — including recruiting, marketing, business development, and community programs.

An organization that conceives, builds, and launches startup companies internally — co-founding startups with the studio team rather than backing external founders.

The schedule by which an employee, founder, or investor earns their equity over time — typically 4 years with a 1-year cliff.

The year a VC fund made its first investment — used to benchmark fund performance against peer funds of the same vintage.

The rights of shareholders to vote on major company decisions — common shareholders typically vote on general matters, while preferred shareholders have special protective votes.

A security giving the holder the right to purchase shares at a specified price before an expiration date — commonly issued alongside venture debt.

The distribution order determining how sale or liquidation proceeds flow to different shareholder classes — senior preferred shareholders are paid before junior preferred, who are paid before common.

The most common form of anti-dilution protection, adjusting an investor's conversion price based on both the new lower price and the number of shares issued.

The key question a startup must answer: what has changed recently that makes this opportunity possible or necessary right now — as opposed to 5 years ago or 5 years from now.

A reduction in the carrying value of a portfolio investment — typically reflecting poor company performance or a down round financing.

A total write-down of a portfolio investment to zero — when a company has failed and the investment is a complete loss.

An increase in the carrying value of a portfolio investment on a fund's books, typically triggered when the company raises a new financing round at a higher valuation.

The concept from Peter Thiel's book describing true innovation — creating something genuinely new (0→1) rather than incrementally improving what already exists (1→n).

A VC fund that is still technically active but effectively unable to return meaningful capital — often because the portfolio has insufficient value to generate positive returns.