Venture Capital Glossary

A fixed-term, cohort-based program providing startups with mentorship, education, and often seed funding in exchange for equity (e.g., Y Combinator, Techstars).

A high-net-worth individual who provides early-stage capital to startups, typically before institutional venture capital firms invest.

Contractual protections that adjust an investor's conversion price or ownership in the event of a down round.

Short-term funding provided to a company between major funding rounds to sustain operations until the next round closes.

The rate at which a startup spends its cash reserves, typically measured monthly. Used to calculate the company's runway.

A detailed record of a company's equity ownership structure, listing all shareholders and their respective ownership stakes.

The percentage of fund profits (typically 20%) paid to general partners as performance-based compensation.

The initial period (typically one year) before any equity vests in a standard vesting schedule.

A form of short-term debt that converts into equity at a predetermined discount during a future financing round.

The rate at which investment opportunities are presented to a VC firm for consideration.

The reduction in ownership percentage experienced by existing shareholders when new shares are issued.

A financing round in which a company's valuation is lower than in its previous round.

The investigation and analysis process conducted by investors before committing capital to a startup.

Ownership interest in a company, represented by shares of stock.

The event through which investors realize returns on their investment, primarily through an IPO or acquisition.

The managing partner(s) of a VC fund responsible for making investment decisions and managing the portfolio.

The process by which a private company offers shares to the public on a stock exchange for the first time.

The VC firm that negotiates the terms of a financing round, typically contributing the largest share of capital and taking a board seat.

An investor in a VC fund who provides capital but does not participate in the fund's management decisions.

The order and amount in which investors are paid before common shareholders during a liquidation or exit event.

A presentation used by founders to introduce their startup to potential investors, covering the problem, solution, market, team, and financials.

The amount of time a startup can continue operating at its current burn rate before running out of cash.

Simple Agreement for Future Equity. A Y Combinator-created investment instrument that converts into equity at a future priced round.

A non-binding document outlining the proposed terms and conditions of an investment.

A privately held startup with a valuation of $1 billion or more.