Startup glossary

Also called angel

An angel investor is an individual who invests their own money in an early-stage startup, usually in exchange for equity, a SAFE, or convertible debt.

Also called bridge financing

A bridge round is temporary financing that extends runway until a specific next event.

Burn multiple is a capital-efficiency metric that measures how much net cash a startup burns to generate each dollar of net new annual recurring revenue.

Also called co-invest

Co-investment is an investment made alongside another investor, usually a fund, lead investor, financial sponsor, or syndicate lead, into the same company or transaction.

Also called convertible debt

A convertible note is a short-term debt instrument that can convert into equity in a later financing, often with interest, maturity, a valuation cap, and/or a discount.

A down round is a financing round in which a startup sells new equity at a lower valuation or lower price per share than a previous priced financing.

Dry powder is capital that an investor or fund has available to deploy but has not yet invested.

Also called round extension

An extension round is interim financing that extends the life or scope of a previous round before the next major financing.

Final close is the final transaction date that ends a fundraising process and locks the committed capital for that fund or round.

First close is the initial legal closing that turns fundraising commitments into an active fund or financing.

A flat round is a later financing priced at roughly the same valuation as the previous financing.

Also called reserves

A follow-on reserve is the portion of a venture fund's committed capital that the fund intentionally holds back for future investments in companies it has already backed.

Also called startup grant

Grant funding is money awarded by a government agency, foundation, university, nonprofit, corporation, or innovation program to support a specific project, mission, research effort, commercialization milestone, or public-interest goal.

Also called competitive moat

A moat is a durable competitive advantage that makes it hard for competitors to copy, undercut, replace, or erode a company's business.

Also called non-dilutive capital

Non-dilutive funding is capital a startup receives without issuing equity or reducing existing shareholders' ownership percentage.

Also called oversubscribed

A round is oversubscribed when investors want to commit more capital than the company is willing or able to accept.

A party round is an early startup financing round with many small investors and no clear lead investor, or only a very weak lead.

Also called pay to play

In venture financing, pay-to-play is a provision that requires existing investors, usually preferred stockholders, to participate in a future financing round to preserve some or all of their preferred-stock rights.

Also called pre money

Pre-money valuation is the agreed value of a company immediately before a new investment round closes.

Also called pre-seed round

Pre-seed is the earliest named startup financing stage, usually raised before a company has enough product, traction, revenue, or institutional validation to raise a traditional seed round.

Also called recap

Recapitalization, often shortened to recap, means changing a company's capital structure.

A rolling close is a financing structure where a startup completes a round through more than one closing date, accepting investment from investors as each investor is ready to sign documents and fund, while keeping the same round open for additional investors for a defined period.

Also called Simple Agreement for Future Equity

A SAFE is an agreement where an investor gives a startup money now in exchange for the right to receive equity later, usually when the company raises a priced round.

Also called discount rate

A SAFE discount is the economic term in a Simple Agreement for Future Equity that lets the SAFE investor convert their investment into stock at a lower price per share than the new investors pay in a future priced equity financing.

Also called secondary transaction

A secondary sale is the sale of existing shares or other equity interests by a current holder to a new buyer.

Also called seed financing

A seed round is early outside capital raised to turn a promising startup idea or early product into a company with enough evidence for the next stage.

Also called A round

Series A is the first major priced venture round after seed, used to scale a startup that has early evidence the business can work.

Also called strategic

A strategic investor is an investor that backs a startup partly or primarily for business reasons beyond direct financial return.

Also called financing term sheet

A term sheet summarizes the key economic and control terms of a financing before the final legal documents are drafted and signed.

Also called valuation cap

A valuation cap sets the maximum company valuation used to convert an early investment into equity, giving early investors a better price if the next round is priced higher.

Venture debt is a loan or credit facility designed for high-growth startups, typically companies that have already raised institutional venture capital and may not qualify for traditional bank debt because they lack profitability, long operating history, predictable cash flow, or hard collateral.

Also called stock warrant

A warrant is a security or contract that gives the holder the right, but not the obligation, to buy a specified number or value of company shares at a specified exercise price before a specified expiration date.