Market & Business
Market dynamics, business models, and industry factors that drive venture capital decisions.
31 terms
AI Wrapper
A startup built primarily on top of an existing AI model or API rather than developing its own foundational model.
Capital Markets
The financial markets where long-term debt and equity securities are bought and sold, including the IPO market.
Creator Economy
A digital economy built around individuals monetizing audiences through platforms, tools, and communities.
Decacorn
A private company valued at $10 billion or more — a step above unicorn status.
Deep Tech
Startups built on significant scientific or engineering innovation that creates fundamental technological advantages.
Denominator Effect
When falling public market values shrink an LP's total portfolio, making their VC allocation appear disproportionately large and potentially triggering a pullback from new commitments.
Dry Powder
The total amount of committed but undeployed capital available to venture capital funds, indicating the industry's capacity for future investment activity.
Expansion Stage
The growth phase after product-market fit where a startup scales operations, team, and revenue aggressively.
Herd Mentality
The tendency for VCs to follow each other into the same sectors, stages, or deals, creating bubbles and crowded investment categories.
Horizontal SaaS
Software products designed to serve multiple industries rather than a specific vertical.
Information Asymmetry Cost
The economic cost borne by the less-informed party in a transaction due to the other party having superior information about the asset's true value.
Lemon Problem
The market failure where information asymmetry causes high-quality deals to leave the market, leaving mostly poor-quality opportunities for less-informed investors.
Long Tail Market
A market composed of many small customer segments that collectively represent significant demand.
Market Saturation
A state where most potential customers already use competing products.
Market Timing Risk
The risk that a fund's vintage year coincides with a market peak, leading to elevated entry prices and compressed returns.
Micro-SaaS
Small, niche SaaS businesses often built by solo founders.
SAM
Serviceable Addressable Market — the portion of the TAM (Total Addressable Market) that a company can realistically target and serve given its current product, geography, and business model.
SOM
Serviceable Obtainable Market — the realistic portion of SAM a company can capture in the near term given its current resources, competitive position, and go-to-market capacity.
SaaS
Software as a Service — cloud-delivered software accessed via subscription, generating recurring revenue. The dominant business model in modern enterprise software.
Startup Ecosystem
The network of investors, founders, accelerators, universities, and service providers supporting startups.
TAM
Total Addressable Market — the total revenue opportunity available if a company captured 100% of its target market.
Take Rate
The share of the money flowing across a platform that the platform keeps as revenue, expressed as a percentage of transaction volume.
Tech Winter
A prolonged downturn in venture funding, startup valuations, and tech hiring — characterized by layoffs, down rounds, and reduced VC activity.
Tiger Global Effect
The market disruption caused when crossover hedge funds deploy massive capital into venture at unprecedented speed and scale.
Unicorn
A unicorn is a privately held company valued at 1 billion dollars or more, based on the post-money valuation of its most recent priced round.
Unprofitable Growth
Growth achieved through subsidized unit economics — where each new customer or transaction loses money — justified by the expectation of future scale or market dominance.
Valuation Compression
A decrease in startup valuations during market downturns.
Vertical SaaS
Software designed for a specific industry such as healthcare, construction, or finance.
Vintage Year Effect
The phenomenon where a fund's performance is significantly influenced by the year it began investing, due to prevailing market conditions, entry valuations, and macroeconomic environment.
Yield Curve Impact
The influence of macroeconomic interest rates on venture capital investment activity.
Zero-Interest Rate Phenomenon (ZIRP)
A macroeconomic environment of near-zero interest rates that historically fueled aggressive venture investing.