Fundraising
How startups and funds raise capital — SAFEs, convertible notes, priced rounds, and LP fundraising strategies.
74 terms
Accelerator
An accelerator is a fixed-term, cohort-based program that invests a standard amount for equity, provides mentorship, and ends in a demo day.
Anchor Investor
The first or largest investor in a funding round who sets the terms and signals confidence to other investors.
Angel Round
The earliest institutional funding round, typically $100K-$2M from individual angel investors.
Angel Syndicate
A group of angel investors who pool capital to co-invest in deals together, typically organized through platforms like AngelList.
Bookrunner
The lead arranger of a funding round who coordinates terms, allocation, and investor participation.
Bootstrapped Startup
A company that grows using revenue and founder capital rather than external investment.
Bootstrapping
Building and growing a company using only personal savings, revenue, and operating cash flow — without raising outside equity capital.
Bridge Loan
Short-term financing that helps a startup survive until it closes its next equity round — typically structured as a convertible note that converts into the new round.
Bridge Round
A small fundraise between larger priced rounds, typically done via SAFE or convertible note to extend runway to a key milestone.
Cap Table
A cap table is the ledger of who owns what in a company: every share, option, warrant and convertible, by holder, class and fully diluted percentage.
Closing Mechanics
The legal and administrative process of finalizing a funding round, including signing documents and wiring funds.
Club Deal
A funding round where multiple investors co-invest at the same terms without a clear lead investor.
Conditional Commitment
An LP's agreement to invest in a fund contingent on specific conditions being met, such as reaching a minimum fund size or obtaining a key person.
Convertible Note
A convertible note is startup debt that converts into stock at the next priced round, priced by a valuation cap or a discount, whichever favors the investor.
Data Room
A secure online repository where startups share sensitive business documents with potential investors during due diligence.
Debt Financing
Raising capital through loans or credit rather than selling equity, preserving ownership but creating repayment obligations.
Demo Day
The culminating event of an accelerator program where startups pitch their companies to a room of investors.
Dilution
The reduction in an existing shareholder's ownership percentage that occurs when a company issues new shares — through equity rounds, option grants, or convertible instrument conversions.
Down Round
A down round is a financing priced below the previous round's price per share, which triggers anti-dilution adjustments for existing preferred holders.
Due Diligence
The investigative process a VC conducts before investing — reviewing financials, references, technology, legal documents, and market assumptions.
Elevator Pitch
A concise, compelling summary of a business that can be delivered in 30-60 seconds.
Emerging Manager Allocation
A dedicated portion of an LP's venture capital budget specifically reserved for investing in first-time or early-vintage fund managers who lack established track records.
Emerging Manager Program
A dedicated allocation within an LP's portfolio specifically for investing in first-time or early-career fund managers.
Equity Financing
Equity financing raises money by selling ownership in the company. There is nothing to repay, but the buyers own a permanent claim on the outcome.
Final Close
The last date on which a venture fund accepts new LP commitments, marking the end of the fundraising period and establishing the fund's total committed capital.
Founder Dilution
The reduction in a founder's ownership percentage as new shares are issued through funding rounds and option grants.
Founder Letter
A personal narrative from the founder included in fundraising materials that explains their mission, motivation, and vision.
Funding Milestone
A measurable goal achieved by a company that enables raising the next funding round.
Fundraising Period
The defined timeframe during which a GP actively raises capital from LPs for a new fund, typically lasting 6-18 months from first close to final close.
Growth Round
A late-stage funding round focused on scaling a proven business model, typically Series C and beyond.
Hard Commitment
A legally binding LP commitment to a fund, as opposed to a soft commitment which is an informal expression of interest that carries no legal obligation.
Hot Round
A fundraise with multiple competing investors, often closing above target amount and at better-than-expected valuations for the startup.
Incubator
An incubator supports companies at the earliest stage with space, mentorship and services, usually with no fixed end date and often without taking equity.
Inside Round
A funding round led by existing investors without participation from new outside investors.
Insider Round
A funding round primarily led by existing investors rather than new external capital.
Institutional LP
Large organizations—pension funds, endowments, insurance companies, sovereign wealth funds—that allocate significant capital to venture funds as part of a diversified investment portfolio.
Institutional Venture Capital
Venture investing done through a professionally managed pooled fund that raises capital from outside investors, rather than by an individual investing their own money.
Investor Syndication
The process of multiple investors participating together in a financing round.
LP Concentration Risk
The risk that arises when a fund is overly dependent on one or a few LPs for the majority of its committed capital, creating vulnerability if those LPs default or do not re-up.
Lead Investor
The investor that sets the terms for a funding round, invests the largest check, and often takes a board seat.
Lightning Round
An extremely fast financing round where investors commit capital quickly with minimal process.
Milestone
A specific, measurable achievement that a startup must reach to unlock additional funding, demonstrate progress, or meet investor expectations.
Negative Signal
Information or events that cause investors to question a company's prospects, making fundraising more difficult.
Negative Signaling
When an existing investor's decision not to participate in a follow-on round sends a bearish signal to potential new investors.
Non-Dilutive Funding
Capital sources that don't require giving up equity — including grants, loans, revenue-based financing, and government programs.
Oversubscribed
A fundraising round that receives more investor commitments than the company (or fund) is seeking to raise — creating scarcity and competitive pressure.
Party Round
A funding round with many small investors and no clear lead investor — often assembled quickly during hot markets, with minimal due diligence.
Pitch Deck
A slide presentation used by founders to communicate their business to potential investors, typically 10-15 slides covering problem, solution, market, traction, and team.
Placement Agent
A firm that helps fund managers find and close institutional LP commitments, typically for a fee of 1-2% of capital raised.
Pre-Seed
The first outside money a company raises, taken before a seed round and usually on a convertible instrument rather than a priced sale of preferred stock.
Preemptive Investment
An investor offering to lead a round before the company formally begins fundraising.
Preemptive Round
A funding round initiated by an investor approaching a company before it was planning to fundraise, often at a premium valuation.
Primary Capital
New equity capital raised directly by a company and added to its balance sheet — as opposed to secondary capital, where existing shareholders sell their shares.
Re-Up Rate
The percentage of existing LPs who commit to a GP's next fund, serving as a key indicator of LP satisfaction and the fund manager's track record.
Reference Check
Conversations with former colleagues, investors, and customers of a founder to verify their character, skills, and track record before investing.
Round
A discrete fundraising event where a company raises a specific amount of capital at a set valuation — named sequentially (Seed, Series A, B, C, etc.).
Runway Extension
Actions taken to extend the time before a company runs out of cash.
SAFE
A SAFE is a contract to issue equity later for money now: no interest, no maturity, converting at the next priced round on a valuation cap or discount.
Scale-Up Financing
Growth capital provided to companies that have achieved product-market fit and need funding to rapidly scale operations, sales, and market presence.
Seed Extension
An additional fundraise at the same terms as a previous seed round — used when a company needs more capital before being ready for a Series A.
Seed Round
The first institutional financing round for a startup, typically ranging from $500K to $5M. Used to fund initial product development, early hiring, and customer validation.
Series A
Series A is the first priced round of preferred stock a startup sells to institutional investors, and the round that installs formal venture governance.
Series B
The third major institutional funding round, typically raised after demonstrating product-market fit and early revenue traction, used to scale sales, marketing, and operations.
Series B Funding
Series B is the priced preferred stock round after Series A, raised once a company has a repeatable sales motion, to fund scale rather than to find it.
Series C
A later-stage venture round typically raised by companies with proven growth, used to scale aggressively, enter new markets, or position for an eventual IPO or large acquisition.
Series D Funding
The fourth priced equity round after Series A, B and C, usually a large late-stage financing bought by growth, crossover and sovereign investors.
Series E Funding
The fifth priced round of preferred stock a venture-backed company sells; the letter records sequence, not size, stage or quality.
Smart Money
Capital from investors who bring significant value beyond the investment itself: expertise, connections, brand, and operational support.
Sovereign Wealth Fund
A state-owned investment fund that deploys national wealth into venture capital and other asset classes, often with very long time horizons and strategic national objectives.
Staged Financing
The practice of funding startups through sequential rounds, each with increasing amounts and valuations as the company de-risks.
Syndicate
A group of investors funding one round behind a lead, today usually pooled into a single per-deal vehicle rather than joining the cap table individually.
Venture Capital vs Private Equity
Venture funds buy minority stakes in young companies with no debt; buyout funds buy control of mature, cash-generating companies using borrowed money.
Working Capital Financing
Short-term financing used to cover operational expenses.
YOLO Round
A highly speculative investment round driven by hype rather than disciplined diligence.