Canonical Upseed vocabulary
Plain definitions for the funding, ownership, program, metric, and ecosystem language you encounter while building or backing a startup.
Legal & Governance
71 reviewed definitions in the current glossary
Debt that can convert into equity.
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.
Plain-English example
An investor lends $500K through a note with a discount. When the startup raises Series A, the note converts according to the note terms.
Watch out
Convertible notes are debt instruments; SAFEs usually are not.
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.
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.
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.
The negotiated blueprint for an investment round.
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.
Plain-English example
A Series A term sheet can include valuation, investment amount, board composition, option pool, liquidation preference, and pro rata rights.
Watch out
The highest valuation is not always the best deal if the rest of the terms are harsh.
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.