The A–Z Glossary of Startup Fundraising (100 Must-Know Terms)

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If you're raising capital, you need to speak the language.
Not just to sound credible — but to avoid getting crushed in negotiations.

This A–Z fundraising glossary includes 100 terms every founder should know before pitching, raising, or signing anything.

Let’s make sure you never get blindsided in a term sheet again.

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A

Accelerator – A fixed-term program that provides mentorship, capital, and exposure (e.g., Y Combinator).
Acquisition – When one company buys another. Exit goal for many startups.
Angel Investor – High-net-worth individual who invests early, usually pre-seed or seed.
ARR – Annual Recurring Revenue. SaaS benchmark metric.
AOV – Average Order Value. Key for e-commerce startup health.
Asks – The amount of capital you're requesting and what it's for.

B

Board of Directors – Formal group that oversees governance and major decisions.
Bootstrapping – Building your business without external capital.
Bridge Round – A small round between major rounds to extend runway.
Burn Rate – How fast you're spending cash each month.
B2B / B2C – Business-to-Business vs Business-to-Consumer models.

C

Cap Table – Capitalization Table; shows who owns what (shares, options, SAFEs).
Cliff – The period before equity begins vesting (typically 1 year).
Convertible Note – A debt instrument that converts to equity at a later funding event.
Crowdfunding – Raising small amounts of money from a large number of people.
Customer Acquisition Cost (CAC) – How much it costs to acquire one paying user.

D

Data Room – A shared folder with all your company docs for due diligence.
Deck – Your pitch presentation. Usually 10–15 slides.
Dilution – When new shares reduce existing ownership percentages.
Down Round – A funding round with a lower valuation than the previous one.
Due Diligence – The investor’s investigation before writing a check.

E

Equity – Ownership in the company, usually in shares.
ESOP – Employee Stock Ownership Plan.
Exit – Liquidity event: IPO, acquisition, or secondary sale.
Early Adopters – First users who validate your product.
Earn-out – Post-acquisition incentive tied to performance.

F

Founder-Market Fit – Why you are the best person to solve this problem.
Friends and Family Round – The first capital from close contacts.
Follow-on Investment – When existing investors re-invest in later rounds.
Full Ratchet – Anti-dilution provision (bad for founders).
Fundraising CRM – A tool to track investor conversations and pipeline.

👉 Related: Fundraising CRM for Startups: The Ultimate Guide

G

GTM (Go-To-Market) – Your strategy for launching and acquiring customers.
Growth Round – Larger rounds (Series B+) used to scale operations fast.
Gross Margin – Revenue minus cost of goods sold (COGS).
Golden Handcuffs – Incentives to keep key employees from leaving.

H

Hockey Stick Growth – Exponential growth curve investors love.
Harvard Cap Table – A spreadsheet format many startups use for ownership tracking.
Holding Company – A legal entity that owns multiple businesses.

I

Incubator – Program that supports very early-stage startups (often before product).
IPO – Initial Public Offering; going public.
Institutional Investor – Professional funds like VC firms, family offices, or pension funds.
IRR – Internal Rate of Return. Measures how fast capital grows.

J

J-Curve – Shows losses early, profits later. Common in startup investing.
Joint Venture – Two companies launching a shared initiative.

K

KPI – Key Performance Indicator. Numbers that show business health.
KISS Note – “Keep It Simple Security” note by 500 Startups, like a SAFE.

L

Lead Investor – The main VC or angel who sets the terms of the round.
Liquidation Preference – Determines payout order if the company exits.
Lean Startup – Build-measure-learn methodology.
LLC – Limited Liability Company. Not optimal for raising VC.
LOI (Letter of Intent) – Non-binding document expressing serious interest.

M

MVP – Minimum Viable Product. The fastest version of your solution that solves the problem.
MRR – Monthly Recurring Revenue.
MOIC – Multiple on Invested Capital (e.g., 5x return = 5 MOIC).
Milestone-Based Funding – Capital released in tranches tied to KPIs.

N

Net Revenue – Revenue after discounts, returns, and allowances.
Non-Dilutive Funding – Grants or revenue financing that doesn’t cost equity.
NDA – Non-Disclosure Agreement. Rare in early-stage VC (usually a red flag if you ask).

O

Option Pool – Shares reserved for future hires. Typically 10–20%.
Operating Plan – Financial and strategic plan shared during diligence.
Oversubscription – More investor interest than allocation available.

P

Pre-Money Valuation – Company valuation before new capital comes in.
Post-Money Valuation – Company valuation after new capital.
Pitch – Your verbal or written fundraising presentation.
Platform Fund – VC firm that offers more than capital (e.g., marketing help, recruiting).
Pro Rata Rights – Right for existing investors to maintain ownership % in future rounds.

Q

QofE (Quality of Earnings) – Report analyzing true profitability.
Quota-Carrying Rep – A salesperson responsible for closing revenue.

R

Runway – How many months of cash you have left.
ROAS – Return on Ad Spend.
RBF (Revenue-Based Financing) – Loan paid back as % of revenue, not equity.
Red Flag – Anything that makes investors hesitate: unclear GTM, messy cap table, etc.

S

SAFE – Simple Agreement for Future Equity. Popular early-stage instrument.
SaaS – Software as a Service.
Seed Round – Early raise to prove traction and build core team.
Series A / B / C – Later stages of capital, usually tied to growth milestones.
SPV (Special Purpose Vehicle) – Investment structure to pool multiple checks.

T

Term Sheet – The legal outline of an investment.
TAM / SAM / SOM – Total / Serviceable / Obtainable market sizes.
Tranche – A portion of a funding round tied to performance.

👉 Related: Founder-Friendly Term Sheet Checklist

U

Unicorn – Private company valued at $1B+.
Uncapped SAFE – No valuation cap — risky for investors, rare in 2025.
Up Round – Funding round at a higher valuation than the last.

V

Valuation – The current value of your startup.
Vesting – Earning equity over time.
VC – Venture Capital. Institutional funding for startups with high growth potential.
Virtual Data Room – Secure cloud storage for investor due diligence.

W

Warm Intro – An introduction to an investor from someone they trust.
Warrant – Right to buy equity at a fixed price (usually tied to debt deals).
Working Capital – Cash needed to operate the business day-to-day.

X

XIRR – Extended Internal Rate of Return. Used to calculate returns over uneven intervals.
X-Factor – The “magic” that makes your startup feel inevitable to investors.

Y

Y Combinator – The most well-known startup accelerator.
Year-over-Year (YoY) – Growth metrics comparing the same period year-to-year.

Z

Zombie Investor – An inactive or low-support investor who stops participating post-investment.
Zero-Coupon SAFE – SAFE note with no interest or cap — theoretical only.

FAQs: Fundraising Terms Founders Ask About

1. What’s the difference between SAFE and convertible note?
SAFE is equity-based, while convertible notes are debt-based and accrue interest.

2. What is dilution?
It’s when your ownership % shrinks as new shares are issued.

3. Why do I need an option pool?
To recruit and retain top talent with equity incentives.

4. What’s a data room?
A secure folder with your startup’s legal, financial, and strategic docs for investors.

5. What’s founder-market fit?
It means you deeply understand the problem and customer because you've lived it.

Conclusion

Fundraising isn’t just about pitching — it’s about knowing the game.

With this A–Z glossary of startup fundraising terms, you’ll walk into investor meetings fluent, focused, and in control.

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