Startups & Venture Capital

45 Startups & Venture Capital terms, defined in plain English — part of the 1345-term Finicade finance glossary. Each one has its own page, and links to the free game that teaches it.

Accelerator: An accelerator gives a small investment, mentorship and a cohort structure over a fixed programme, ending in a demo day for investors.
Angel Investor: An angel investor is an individual putting their own money into very early companies, typically writing cheques from a few thousand to a few hundred thousand.
Annual Recurring Revenue: ARR is contracted recurring subscription revenue expressed annually — the metric SaaS companies are valued on.
Anti-Dilution Protection: Anti-dilution protection adjusts an earlier investor conversion price if a later round prices lower, shielding them from a down round.
Board Seat: A board seat gives an investor formal governance rights — hiring and firing the CEO, approving budgets, approving a sale.
Bridge Round: A bridge round is short-term funding to reach the next milestone or the next proper round, usually from existing investors on a note or SAFE.
Burn Rate: Burn rate is how much cash a company consumes per month.
Cap Table: A cap table records who owns what — shares, options, warrants, convertibles — and what each would receive in an exit.
Carried Interest: Carried interest is the share of profits a fund manager keeps, conventionally 20% above a hurdle.
Churn Rate: Churn is the rate at which customers or revenue leave.
Cohort Analysis: Cohort analysis groups customers by when they joined and tracks each group separately over time.
Convertible Note: A convertible note is a loan that converts to equity at the next priced round, usually with a discount and a valuation cap.
Customer Acquisition Cost: CAC is total sales and marketing spend divided by new customers acquired in a period.
Customer Lifetime Value: Lifetime value estimates the gross profit a customer generates over their whole relationship.
Down Round: A down round raises money at a lower valuation than the previous one, triggering anti-dilution provisions and heavy dilution for founders and employees.
Dry Powder: Dry powder is committed capital a fund has not yet invested.
Exit: An exit is the event that converts illiquid equity into cash or listed shares — an acquisition, an IPO, or occasionally a secondary sale.
Follow-On Investment: A follow-on is additional investment in an existing portfolio company, funded from reserves a fund sets aside for the purpose — often half the fund or more.
Founder Vesting: Founder vesting puts founders own shares on a vesting schedule, typically four years with a one-year cliff, so early leavers do not keep a large stake.
Fund Vintage: A fund's vintage is the year it began investing, and it explains an enormous share of returns.
General Partner: The general partner manages a fund: sourcing deals, making investment decisions, sitting on boards and running the exit.
J-Curve: The J-curve describes a private fund's return path: negative early as fees are charged and investments sit at cost, then rising as exits arrive.
Limited Partner: Limited partners are the investors in a fund — pensions, endowments, family offices — who commit capital and have no say in individual investments.
Liquidation Preference: A liquidation preference guarantees investors get their money back — usually 1× — before common shareholders receive anything in an exit.
Minimum Viable Product: An MVP is the smallest thing you can build that tests whether the core assumption is true.
Net Revenue Retention: Net revenue retention measures revenue from existing customers a year later, including upgrades and downgrades.
Option Pool: An option pool is shares reserved for future employee equity grants, typically 10–20% of the company.
Participating Preferred: Participating preferred lets an investor take their liquidation preference and then also share in what is left, as if they held common stock.
Pivot: A pivot is a substantial change in strategy that keeps what the team learned: a new customer segment, a new product, a different business model.
Power Law: The power law is the observation that venture returns concentrate almost entirely in a few investments, with one or two beating all the others combined.
Pre-Money vs Post-Money Valuation: Pre-money is what a company is agreed to be worth before new investment; post-money is that plus the money raised.
Pre-Seed: Pre-seed is the earliest institutional-ish money, funding a team to build a first product and find evidence of demand.
Pro Rata Rights: Pro rata rights let an existing investor maintain their ownership percentage by investing in future rounds.
Product-Market Fit: Product-market fit is the point where a product satisfies a real demand strongly enough that growth begins pulling the company along rather than being pushed.
Rule of 40: The Rule of 40 says a software company growth rate plus its profit margin should exceed 40 — grow fast or be profitable, but do not fail at both.
Runway: Runway is how many months a company can survive at its current burn before running out of cash.
SAFE: A SAFE gives an investor the right to shares in a future priced round rather than shares today, avoiding the cost of setting a valuation early.
Secondary Sale: A secondary sale lets existing shareholders — founders, early employees, early investors — sell shares to new investors without the company raising money.
Seed Round: A seed round funds the search for product-market fit — enough capital to build, launch and iterate for 18 to 24 months.
Series A: A Series A is the first large priced institutional round, funding a company that has found product-market fit to build a repeatable go-to-market engine.
Total Addressable Market: TAM is the total revenue available if a product captured 100% of its market, narrowed to serviceable and obtainable subsets.
Unicorn: A unicorn is a private company valued at $1bn or more.
Unit Economics: Unit economics is the profitability of one customer or transaction, stripped of fixed overhead.
Valuation Cap: A valuation cap sets the maximum valuation at which a SAFE or note converts, so early investors get more shares if the next round prices higher.
Venture Capital: Venture capital funds young companies too risky for debt, taking minority equity stakes in exchange for capital and governance rights.

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