Master the language of venture capital with 100+ terms every founder needs to know
A spreadsheet showing the equity ownership structure of a company, including shares, options, and ownership percentages.
The reduction in existing shareholders' ownership percentage when new shares are issued.
The timeline over which employees earn their stock options or equity grants.
A period before vesting begins, typically one year for employees.
The rate at which a company spends its cash reserves, typically measured monthly.
The amount of time a company can operate before running out of cash.
A financing contract that allows investors to buy shares in a future priced round, popularized by Y Combinator.
A loan that converts to equity at a future financing round, typically with a discount or valuation cap.
The first significant round of venture capital financing, typically $2-15M for scaling proven concepts.
The investigation process investors conduct before making an investment decision.
The primary investor who sets terms, prices the round, and typically takes a board seat.
The order and amount investors get paid in a liquidation event before common shareholders.
The right for investors to maintain their ownership percentage in future funding rounds.
A non-binding agreement outlining the basic terms and conditions of an investment.
The total revenue opportunity available for a product or service.
The portion of TAM that your product can realistically serve.
The portion of SAM you can realistically capture in the near term.
The predictable revenue a company expects to receive every month from subscriptions.
The yearly value of recurring revenue from subscriptions, calculated as MRR × 12.
The share of profits (typically 20%) that general partners receive from successful investments.
Investors who provide capital to venture funds but don't actively manage investments.
The managing partners of a VC fund who make investment decisions and manage portfolio companies.
An independent appraisal of a private company's stock value for tax compliance purposes.
The value of a company before receiving a new investment round.
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