Canonical Upseed vocabulary
Plain definitions for the funding, ownership, program, metric, and ecosystem language you encounter while building or backing a startup.
Equity & Ownership
71 reviewed definitions in the current glossary
The ownership map of a company.
Also called capitalization table
A cap table records who owns a company, what securities they hold, and how ownership changes after financing, grants, conversions, or exits.
Plain-English example
A founder may own 70% before a seed round and 55% after new shares, SAFE conversion, and option pool expansion.
Watch out
Authorized shares, issued shares, and fully diluted ownership are different views.
Ownership percentage decreases when new shares are issued.
Also called equity dilution
Dilution happens when a company issues more shares, reducing an existing holder's ownership percentage even if the value of their stake may increase.
Plain-English example
If you own 10% and the company issues many new shares in a financing, you may own 8% afterward.
Watch out
Dilution is not automatically bad. It is bad when the capital does not increase company value enough.
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.
Who gets paid first in an exit or liquidation.
Also called liq pref
A liquidation preference defines how preferred shareholders are paid before common shareholders in a sale, liquidation, or similar event.
Plain-English example
With a 1x non-participating preference, an investor generally chooses between getting their money back first or converting to common.
Watch out
High valuation can be offset by investor-friendly preference terms.
Equity reserved for employees and advisors.
Also called employee option pool
An option pool is a block of company equity reserved for current and future employees, advisors, and other contributors.
Plain-English example
A Series A investor may ask for a 10% post-financing pool so the company can hire executives and engineers.
Watch out
A pre-money pool increase usually dilutes existing holders before the new investor invests.
Also called pre money
Pre-money valuation is the agreed value of a company immediately before a new investment round closes.
The right to maintain ownership in future rounds.
Also called pro rata rights
Pro rata rights let an investor buy enough of a future financing to maintain their ownership percentage.
Plain-English example
An investor owning 5% may have the right to buy 5% of the next round.
Watch out
Pro rata is usually a right, not an obligation.
Simple Agreement for Future Equity.
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.
Plain-English example
A startup raises $1M on a SAFE with a $10M valuation cap. At Series A, the SAFE converts using the agreed conversion mechanics.
Watch out
A SAFE is not free money and not usually debt. It is future dilution waiting to be modeled.
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.
A ceiling on the conversion valuation for a SAFE or note.
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.
Plain-English example
If the cap is $10M and the next round prices at $20M, the early investor usually converts as if the valuation were $10M.
Watch out
A valuation cap is not the current valuation. It is a conversion rule.
Source and update disclosure
Source basis
Every published term requires an Upseed-authored definition, a completed review, high source confidence, and at least one HTTPS source. Each entry links to one primary or representative source and states how many sources were reviewed.
Last reviewed
June 5, 2026
Known limits
Startup and investment language can vary by market, document, and jurisdiction. These definitions explain common usage and are not legal, financial, tax, or investment advice.
Upseed is an independent guide. Definitions are educational explanations, not representations made on behalf of the organizations or sources linked.