Whether you're a founder prepping for your next raise or a VC deciphering a new pitch deck, there's one thing we can all agree on: venture capital has a lot of jargon.

This guide is here to cut through the noise. We’ve compiled 150 of the most relevant terms in the world of startups and venture, thoughtfully grouped by themes—from legal and compliance, to valuation mechanics, funding stages, and everything in between.

Think of it as your go-to glossary for navigating deals, aligning expectations, and speaking the same language—whether you're writing the term sheet or receiving it.

Let's dive in 📘

💼 Fund Structure & Economics (VC-side)

1. Limited Partner (LP): An investor in a venture fund who provides capital but does not participate in day-to-day management. LPs typically include institutions, family offices, and high-net-worth individuals.
2. General Partner (GP): The manager of a venture fund responsible for making investment decisions, managing the portfolio, and interacting with LPs. GPs also invest their own capital and earn carried interest.
3. Carried Interest (Carry): A share of the profits—typically around 20%—that GPs receive from a fund's returns, only after LPs have received their capital back plus a preferred return.
4. Management Fee: An annual fee (often 2%) paid by LPs to the GP to cover operating expenses, typically based on committed or invested capital.
5. Capital Call: A formal request by the GP for a portion of the capital that LPs have committed to the fund, used to make investments or cover expenses.
6. Dry Powder: Capital that has been committed by LPs but not yet deployed by the GP. It represents a fund’s available firepower for future investments.
7. Internal Rate of Return (IRR): A performance metric showing the annualized rate of return generated by an investment, taking into account the timing of cash flows.
8. Preferred Return: The minimum return (often 8%) that LPs must receive before the GP is entitled to earn carried interest on fund profits.
9. Fund Lifecycle: The typical lifespan of a venture fund, usually around 10 years, including stages like fundraising, investing, managing, and exiting.
10. Hurdle Rate: The minimum rate of return that a fund must generate before the GP is entitled to receive carried interest.
11. Deployment Rate: The pace at which a fund invests its committed capital into startups. A slow rate may indicate caution, while a fast rate may imply aggressive investing.
12. Commitment Period: The time window—usually the first 3–5 years of a fund’s life—during which LPs are expected to fund capital calls and the GP makes new investments.
13. Vintage Year: The year a venture fund is officially launched and starts deploying capital. It's used to benchmark performance against peer funds from the same period.
14. Fund of Funds: An investment vehicle that allocates capital to multiple venture funds rather than investing directly into startups.
15. Cash-on-Cash Return: A measure comparing the cash returned to investors to the initial cash they invested. For example, a 3x return means tripling the money invested.
16. Net IRR: The IRR that LPs receive after all fees and carry are deducted, reflecting the true net performance of the fund from the investor's perspective.
17. Gross IRR: The IRR calculated before deducting management fees and carried interest, often used to measure a GP’s raw investment performance.
18. Total Return: The overall return from an investment, including both capital appreciation and any income (e.g., dividends or interest) over a period of time.
19. Capital Preservation: An investment strategy focused on minimizing losses and maintaining the original capital invested, often favored in lower-risk portfolios.

📈 Startup Financial Metrics & KPIs

20. ARR (Annually Recurring Revenue): The value of recurring revenue a company expects to generate in a full year from subscriptions or contracts. Commonly used in SaaS businesses.
21. MRR (Monthly Recurring Revenue): The total predictable revenue a company earns monthly from subscriptions or recurring payments. It’s a key indicator of stability and growth in SaaS models.
22. CAC (Customer Acquisition Cost): The average cost of acquiring a new customer, including sales, marketing, and onboarding expenses.
23. LTV (Lifetime Value): The projected revenue a business can expect from a customer over the entire span of their relationship.
24. LTV/CAC Ratio: A metric that compares customer lifetime value to acquisition cost. A ratio above 3:1 is typically considered healthy and sustainable.
25. Burn Rate: The rate at which a startup is spending cash each month. A critical metric for calculating how long a company can operate before needing new funding.
26. Cash Runway: The amount of time (in months) a startup can keep operating at its current burn rate before running out of cash.
27. Churn Rate: The percentage of customers who stop using a product or cancel a subscription during a given time period. Lower churn indicates higher retention.
28. Revenue Retention (NRR, GRR): Gross Revenue Retention (GRR) measures how much revenue is retained from existing customers without upsells. Net Revenue Retention (NRR) includes upsells and expansions.
29. Run Rate: An estimate of future financial performance based on current revenue or expenses, projected over a 12-month period. Often used to annualize MRR.
30. Gross Margin: The percentage of revenue remaining after subtracting the cost of goods sold (COGS).
31. Breakeven: The point at which a startup’s revenue equals its expenses, meaning it is no longer operating at a loss.
32. GMV (Gross Merchandise Value): The total sales dollar value of merchandise sold through a platform over a certain period, typically used by e-commerce or marketplace businesses.
33. ARPU (Average Revenue Per User): The average amount of revenue generated per customer or user over a specific time frame. Helpful in understanding user monetization.
34. DAU / MAU: Daily Active Users (DAU) and Monthly Active Users (MAU) are engagement metrics showing how often users interact with a product. DAU/MAU ratio indicates stickiness.
35. KPI (Key Performance Indicator): A measurable value that indicates how effectively a company is achieving its key business objectives.
36. Traction: Evidence that a product or company is growing and gaining market acceptance—often measured by user growth, revenue, or engagement metrics.

💰 Valuation & Capital Structure

37. Cap Table: Short for “capitalization table,” this document outlines who owns what percentage of a company, including founders, investors, and employees.
38. Pre-Money Valuation: The valuation of a company immediately before new investment is added. It determines how much of the company new investors will own.
39. Post-Money Valuation: The valuation of a company after a funding round has closed. It equals the pre-money valuation plus the new capital raised.
40. Capital Stack: The hierarchy of capital invested in a company—typically includes equity, preferred shares, convertible notes, and debt, each with different risk and return profiles.
41. Equity Dilution: The reduction in ownership percentage when new shares are issued, typically during fundraising rounds or when options are exercised.
42. Anti-Dilution Clause: A protection for investors that adjusts their ownership if the company issues new shares at a lower price than they paid (a “down round”).
43. Option Pool: A reserved percentage of equity set aside for future employee stock options. It’s typically included in the pre-money valuation.
44. Option Pool Shuffle: A negotiation tactic where investors push for the option pool to be created or expanded before the investment, diluting founders instead of new investors.
45. Fully-Diluted Share Capital: The total number of shares a company would have if all options, warrants, and convertible securities were exercised.
46. SAFE (Simple Agreement for Future Equity): An investment contract where investors give money now in exchange for the right to receive equity in the future, usually during a priced round.
47. Convertible Note: A form of short-term debt that converts into equity at a later financing round, often including a discount or valuation cap as investor incentives.
48. Valuation Cap: The maximum valuation at which a SAFE or convertible note converts to equity. It protects early investors from excessive dilution.
49. Discount Rate (on SAFE/Note): A percentage discount applied to the price per share during conversion, giving early investors equity at a cheaper rate than new investors.
50. Down Round: A funding round in which a startup raises capital at a lower valuation than in a previous round, often signaling company challenges.
51. Up Round: A funding round raised at a higher valuation than the previous round, indicating growth and positive momentum.
52. Pay-to-Play: A provision requiring existing investors to participate in future rounds (usually down rounds) to retain certain rights or avoid penalties.
53. Price Per Share: The valuation of each individual share in a company, used to calculate ownership and determine how much equity an investor receives.
54. Liquidation Preference: A right that gives investors priority in receiving their investment back (often with a return) before common shareholders in a liquidation event.
55. Non-Participating Preference: Investors get their investment back first in a liquidation but do not share in any remaining proceeds unless they convert to common shares.
56. Participating Preference: Investors receive their investment back and then also share in the remaining proceeds alongside common shareholders, often capped.
57. Exit Waterfall: A model that defines how proceeds from a sale or liquidation are distributed among investors and shareholders, based on priority and class.
58. Pari Passu: A term meaning "equal footing"—used when multiple classes of investors share returns proportionally without any class receiving preferential treatment.

⚖️ Deal Terms & Legal Concepts

59. Term Sheet: A non-binding document outlining the key terms and conditions of a potential investment. It sets the framework for final legal agreements.
60. Board Seat: A formal position on the company’s board of directors, typically granted to lead investors for governance and oversight purposes.
61. Voting Rights: The right of shareholders to vote on company matters such as board elections, fundraising, or mergers. Voting power is tied to share class.
62. No-Shop Clause: A term in a term sheet requiring the company not to solicit or negotiate with other investors for a certain period.
63. Exclusivity Period: The time frame during which the startup must exclusively negotiate with the lead investor before seeking other funding offers.
64. Information Rights: Contractual rights that allow investors to receive regular company updates such as financial statements, board minutes, or key metrics.
65. Board Observer Rights: The right to attend board meetings and access board materials without formal voting power—commonly granted to certain investors.
66. Drag-Along Rights: A clause that allows majority shareholders to force minority shareholders to sell their shares if the company is being acquired.
67. Tag-Along Rights: A protection for minority shareholders, giving them the right to join in a sale if majority shareholders are selling their shares.
68. Enhanced Voting Rights: Special rights giving certain shareholders (often founders) more voting power per share, used to retain control despite dilution.
69. Reserved Matters: A list of decisions that require investor or board approval—such as issuing new shares, changing the business model, or selling the company.
70. Vesting Schedule: The timeline over which equity or stock options are earned. Commonly used for founders and employees to incentivize long-term commitment.
71. Cliff: The minimum period an individual must work before any of their stock or options vest. A standard setup is a 1-year cliff in a 4-year vesting plan.
72. Reverse Vesting: A structure where founders own their shares up front but risk losing unvested shares if they leave early. Protects the company’s equity structure.
73. Founders’ Lock-In: A contractual requirement that founders stay with the company for a certain period or face penalties, often linked to vesting or share transfer restrictions.
74. Good Leaver / Bad Leaver: Terms that determine what happens to a departing founder’s shares depending on the reason for departure—voluntary, fired, etc.
75. Redemption Rights: Rights allowing investors to demand their investment back after a set period, often used as leverage if a company isn’t progressing.
76. Warrants: Securities giving the holder the right to buy shares at a specific price in the future. Often used as investor sweeteners or compensation.
77. SAFE with Post-Money Valuation: A variation of the SAFE that calculates ownership based on the company’s valuation after the investment, giving more clarity to investors.
78. Right of First Refusal (ROFR): The right for existing investors or shareholders to match the terms of an external offer before shares are sold to a third party.
79. Pre-Emption Rights (on transfers and allotments): Rights allowing existing shareholders to maintain their ownership percentage by participating in future funding rounds or share transfers.

💸 Investment Stages & Instruments

80. Pre-Seed: The earliest round of funding, often from friends, family, or angel investors, used to test an idea or build a prototype before significant traction.
81. Seed Round: An early-stage funding round used to develop a product, hire a core team, and find product-market fit. Typically raised after initial proof of concept.
82. Series A: A company’s first significant round of venture capital, focused on scaling the business, building out the team, and optimizing the product.
83. Series B: A growth-stage funding round used to expand market reach, increase revenue, and scale operations significantly beyond early traction.
84. Bridge Round: A short-term round of funding meant to “bridge” the company between two larger rounds or major milestones, often with convertible instruments.
85. Extension Round: An add-on to a previous funding round, allowing the company to raise additional capital on the same valuation and terms.
86. Convertible Debt: A loan that converts into equity at a future financing event, typically at a discount or capped valuation, used in early-stage investing.
87. Advance Subscription Agreement (ASA – UK): A UK-specific contract similar to a SAFE, allowing an investor to fund a company now in exchange for future equity during a qualifying round.
88. Venture Debt: A loan provided to startups backed by VC funding, often used to extend runway without immediate dilution of equity.
89. Equity Round: A fundraising round where investors receive shares in exchange for capital. Typically involves issuing preferred stock with negotiated terms.
90. Follow-On Funding: Investment provided to a startup in later stages by existing or new investors to support growth or bridge to the next round.
91. Co-Investment: When investors (often LPs or angels) invest alongside a lead VC in a specific deal, usually on the same terms but outside the main fund.
92. Deal-by-Deal Basis: An investment model where capital is raised and deployed for individual deals rather than through a pooled fund structure.
93. Rolling Fund: A subscription-based fund model that raises capital quarterly, allowing continuous fundraising and flexible LP participation over time.

🏗️ Company Building & Strategic Ops (Founder-centric)

94. Accelerator: A fixed-term, cohort-based program that provides early-stage startups with mentorship, resources, and funding in exchange for equity, typically culminating in a demo day.
95. Incubator: A support program for startups that provides workspace, mentorship, and business services, usually in the earliest stages and often without taking equity.
96. Bootstrapping: Building a startup using personal savings or business-generated revenue, rather than external funding, to maintain control and equity.
97. Freemium: A business model offering a basic product or service for free, while charging for advanced features, functionality, or usage.
98. Product-Market Fit: The point at which a startup’s product satisfies a strong market demand, typically reflected in high user retention and organic growth.
99. Minimum Viable Product (MVP): The simplest version of a product that can be launched to gather feedback and validate demand before investing in full-scale development.
100. Founder-Market Fit: The alignment between a founder’s background, passion, or expertise and the market they’re building in—seen as a key predictor of startup success.
101. Hockey Stick Growth: A sharp inflection in growth following a period of slow or moderate progress, often used to describe exponential revenue or user growth.
102. Lean Startup: A methodology focused on building products iteratively, validating assumptions quickly, and minimizing waste through constant user feedback.
103. Strategic Advisor: An experienced individual who provides founders with ongoing guidance, industry expertise, and introductions, often in exchange for equity.
104. Entrepreneur in Residence (EIR): A temporary role at a VC firm or incubator where an entrepreneur is given resources to explore ideas or join a portfolio company in a leadership role.
105. Friends, Family & Fools: An informal term for the earliest group of non-professional investors—usually close contacts—who provide capital based on personal trust.
106. Gearing: The use of debt to finance business growth. High gearing indicates a greater proportion of debt relative to equity, increasing both risk and potential return.
107. Operating Leverage: The ratio of fixed to variable costs in a business. High operating leverage means small increases in revenue can lead to large increases in profit.
108. Growth Proposition: A startup’s overall narrative for how it plans to grow—through market size, business model, product advantage, or scalability.

💵 Exit & Liquidity Terms

109. Exit: The process by which investors or founders sell their stake in a company, typically through an acquisition, IPO, or secondary sale, to realize returns.
110. Liquidity Event: An event that allows shareholders to convert their equity into cash—such as an acquisition, IPO, or large secondary transaction.
111. M&A (Mergers & Acquisitions): A transaction where one company is acquired by or merges with another. Common exit path for startups, providing liquidity for investors.
112. IPO (Initial Public Offering): The process of offering a private company’s shares to the public for the first time on a stock exchange, creating liquidity and access to public capital.
113. Secondary Sale: When existing shareholders (e.g. early employees or investors) sell their shares to new investors, rather than the company issuing new equity.
114. Tender Offer: A type of secondary transaction where buyers offer to purchase shares from existing shareholders, usually at a set price and quantity.
115. Buyback: When a company repurchases its own shares from shareholders, reducing outstanding equity and often signaling confidence in its value.
116. Earn-Out: A deal structure where part of the acquisition price is contingent on the startup achieving future performance targets.
117. Realization: The point at which investors convert paper gains into actual returns—usually through an exit like an IPO, acquisition, or secondary sale.
118. Lock-Up Period: A fixed time after an IPO or acquisition during which insiders are restricted from selling their shares, typically 90–180 days.

📜 Compliance, Regulatory & Tax

119. EIS (Enterprise Investment Scheme – UK): A UK government scheme offering tax relief to investors who buy shares in qualifying early-stage companies, encouraging venture investment.
120. SEIS (Seed Enterprise Investment Scheme – UK): A more generous UK tax relief scheme than EIS, designed to support very early-stage startups by offering higher income and capital gains tax reliefs to investors.
121. 409A Valuation (US): An independent appraisal used in the US to determine the fair market value of a private company’s common stock, often required when issuing stock options.
122. HMRC Advance Assurance: A pre-approval from HMRC confirming that a UK company’s investment is likely to qualify for SEIS or EIS relief, which reassures potential investors.
123. Business Relief (BR / BPR): A UK tax relief that allows qualifying business assets, including shares in some startups, to be passed on free of inheritance tax.
124. KIC (Knowledge-Intensive Company): A UK classification for startups heavily focused on R&D or intellectual property, offering enhanced EIS/SEIS tax benefits to investors.
125. Regulatory Manager: A person or entity responsible for ensuring a fund or investment vehicle complies with relevant financial regulations and reporting obligations.
126. VCT (Venture Capital Trust – UK): A UK-listed, tax-advantaged investment fund that invests in early-stage companies. Investors receive income tax reliefs and tax-free dividends.
127. ESOP / EMI Scheme: Employee share option plans (ESOPs) and Enterprise Management Incentive (EMI) schemes are UK programs that grant employees tax-efficient equity in startups.
128. NIL Rate Band: A UK inheritance tax threshold under which no tax is due. Relevant when passing on qualifying business assets under Business Relief.
129. Warranties: Legal assurances provided by the company during investment or acquisition, confirming facts about its operations, finances, and legal standing.
130. IP Assignment: A legal agreement transferring ownership of intellectual property (e.g. code, inventions) from employees or contractors to the company.
131. Service Agreements: Contracts between the company and key personnel (e.g. founders, executives) outlining employment terms, duties, compensation, and IP clauses.
132. Non-Compete / Non-Solicit Clauses: Contractual clauses that restrict founders or employees from joining competitors or poaching staff/customers for a specified period after leaving the company.

🚀 Emerging / Trendy VC Terms

133. Solo Capitalist: An individual VC who raises and invests their own fund independently, often moving faster and writing flexible checks without institutional overhead.
134. Platform Team: Non-investment staff at a VC firm who support portfolio companies with hiring, marketing, operations, and other strategic needs beyond just capital.
135. Operator Angel: An angel investor who is also a startup operator (e.g. founder or exec) and provides hands-on guidance, intros, or operational support along with capital.
136. Scouting Program: A VC strategy where external entrepreneurs or insiders refer deals to the firm in exchange for finder’s fees, access, or carry.
137. Signal / Noise Ratio: A reference to how much useful, high-quality information (signal) exists in comparison to distractions or low-value inputs (noise) when evaluating startups.
138. Data Room: A secure online repository where startups store documents (e.g. financials, legal contracts) for investor due diligence during fundraising or M&A.
139. Due Diligence: A thorough review process investors use to evaluate a startup’s business, financials, legal status, and team before making an investment.
140. Proprietary Deal Flow: Investment opportunities sourced directly by a VC through relationships or reputation, rather than through competitive or public channels.
141. Uncapped SAFE: A SAFE (Simple Agreement for Future Equity) with no valuation cap, meaning the investor doesn’t have a predefined maximum valuation for equity conversion—less favorable to investors.
142. Rights of First Refusal Syndicate: An investor group that collectively holds ROFR on shares, allowing them to coordinate and prevent unwanted ownership changes.
143. Founder-Friendly Terms: Investment terms that are structured to protect founders—like no liquidation preference or maintaining founder control—even as capital is raised.
144. Unicorn: A privately held startup valued at over $1 billion. Coined to reflect their rarity when the term was introduced.
145. Decacorn: A privately held startup valued at over $10 billion—10x the valuation of a unicorn, but becoming increasingly common in recent years.
146. Cap Table Modeling: The process of forecasting how ownership and dilution change across future fundraising rounds and scenarios using a detailed capitalization table.
147. Bridge-to-Nowhere: A red flag term for a bridge round raised without a clear plan or milestone to reach a sustainable next stage—often a sign of trouble.
148. Founder Liquidity: When a founder sells some of their shares (usually in a secondary round) before a full company exit, allowing them to realize partial gains early.
149. Superpro Rata: A special investor right to invest more than their pro rata share in future funding rounds—often reserved for strategic or early investors.
150. Stealth Mode: A stage where a startup intentionally avoids public attention—often by hiding its product, website, or marketing—while developing technology or gaining early traction.

🎁 Some More Deal Terms & Legal Provisions (Bonus Section)

1. The Stock Purchase Agreement (SPA): A binding legal document outlining the terms under which investors purchase shares in a company, including price, closing conditions, and reps & warranties.
2. Investor Rights Agreement (IRA): An agreement granting investors specific rights post-investment—such as information rights, registration rights, and rights of first refusal.
3. Certificate of Incorporation: A legal document filed with the state to officially form a corporation. It defines share classes, authorized stock, and sometimes includes protective provisions.
4. ROFR & Co-Sale Agreement: Combines the right of first refusal (ROFR) with co-sale rights, allowing investors to purchase shares before they’re sold to a third party or sell alongside founders in a liquidity event.
5. Voting Agreement: A contract that outlines how shareholders agree to vote on certain corporate matters, such as electing directors or approving major events.
6. Boardroom Makeup: Refers to the composition of a company’s board of directors, typically negotiated during fundraising to balance founder, investor, and independent seats.
7. Money Raised: The total amount of capital a startup has secured from investors across its fundraising rounds. It can refer to individual rounds or cumulative funding.
8. Non-Participating Liquidation Preference: A clause where preferred shareholders receive their investment back during a liquidation event but do not participate in any remaining proceeds.
9. 1:1 Conversion to Common: A standard term allowing preferred shares to convert into one common share per preferred share, often at the investor’s discretion during an exit or IPO.
10. Valuation/Dilution: Refers to the relationship between a startup’s valuation and the dilution experienced by shareholders during fundraising. A higher valuation generally means less dilution for existing owners.
11. Protective Provisions: Special rights that give preferred shareholders the power to veto key corporate actions, such as issuing new shares, selling the company, or amending the charter.
12. Series of Preferred Stock: Each funding round (Series A, B, etc.) typically issues a new class or “series” of preferred stock with its own rights, preferences, and terms.
13. Preferred Stock: A class of shares given to investors with special rights such as liquidation preference, anti-dilution protection, and dividends—senior to common stock.
14. Senior Liquidation Preference: A term giving one class of preferred stock priority over other investors in a liquidation event—paid before junior or common stockholders.
15. Multiple Liquidation Preference: Allows investors to receive a multiple (e.g. 2x) of their original investment before other shareholders are paid in a liquidation event.
16. Cumulative Dividends: Dividends that accrue over time if not paid out and are due upon exit or liquidation—unlike non-cumulative dividends, which lapse if unpaid.
17. Conversion Rate: The ratio at which preferred shares convert into common shares—typically 1:1 unless adjusted due to anti-dilution provisions or stock splits.
18. Corporate Reorganization: A restructuring of a company’s legal or financial structure, such as a merger, acquisition, recapitalization, or spin-off.

And there you have it 🔍

From “anti-dilution” to “superpro rata,” we’ve unpacked the terms that come up in real conversations between founders and investors—without the fluff or legalese.

Whether you’re building the next unicorn or backing it, understanding these concepts builds stronger partnerships, better deals, and fewer awkward pauses on Zoom.

Keep this guide close—refer back when things get murky, share it with your team, and consider it your shared vocabulary for the road ahead.

Good Luck :)

This article was originally published on Entrepreneur's Handbook on Medium.