Strategy & Portfolio
Strategic approaches to portfolio construction, investment thesis, and fund management.
137 terms
AI Native Company
A company built from the ground up with AI as a core product capability rather than an add-on feature.
Additionality
The concept that an impact investment generates social or environmental outcomes that would not have occurred without that specific investment, beyond what the market would have delivered anyway.
Adjacency Expansion
A company expanding into closely related products or markets to grow beyond its initial offering.
Adoption Curve
The pattern describing how new technologies are adopted over time by innovators, early adopters, early majority, late majority, and laggards.
Adverse Selection
The tendency for the worst deals to seek out less experienced or desperate investors, while the best deals go to top-tier funds.
Anti-Portfolio
The collection of successful companies a VC firm passed on investing in — a humbling record of missed opportunities.
Asset-Light Model
A business model that minimizes physical assets and capital expenditure, relying instead on software, platforms, or third-party infrastructure.
Asymmetric Information
When one party in a transaction has more or better information than the other, creating an imbalance.
Asymmetric Returns
The defining characteristic of venture investing: limited downside (lose the investment) with potentially unlimited upside (100x+ returns).
Back-Channel Reference
An informal reference check conducted through personal networks rather than through references provided by the founder.
Barbell Strategy
An investment strategy combining high-risk startup bets with more stable investments to balance overall risk.
Beta Product
A product released to a limited audience for testing before full commercial launch.
Blended Finance
A structuring approach that combines concessionary capital from development institutions with commercial capital from private investors to fund ventures in underserved markets.
Blitzscaling
A strategy of prioritizing speed over efficiency to rapidly capture market share, accepting extreme capital burn and operational chaos in pursuit of winner-take-all scale.
Blue Ocean Strategy
Creating uncontested market space rather than competing in existing, crowded markets.
Bottom-Up Analysis
A market sizing approach that builds estimates from actual customer data and unit economics rather than top-down market reports.
Bozo Explosion
When a company grows quickly and hires too many mediocre employees, reducing organizational effectiveness.
Breakout Company
A startup that achieves exceptional growth and market traction relative to its peers.
Catalytic Capital
Patient, risk-tolerant capital that accepts below-market returns or higher risk to enable impact investments that would not otherwise attract commercial funding.
Category Creation
A startup defining a new market segment rather than competing directly within an existing one.
Category King
The dominant company in a market category that captures most of the value.
Closet Indexing
When a fund claims to be actively managed but its portfolio closely mirrors a benchmark index, delivering index-like returns at active management fees.
Cold Start Problem
The difficulty of building a network-based product before enough users exist to make the product valuable.
Competitive Landscape
The market environment of direct and indirect competitors a startup operates within.
Competitive Moat
A durable structural advantage that protects a company from competitors.
Contrarian Investing
An investment approach that deliberately goes against prevailing market sentiment, betting that consensus views are wrong about a sector, company, or trend.
Customer Acquisition Funnel
The step-by-step journey a potential customer takes from awareness to purchase.
Customer Segmentation
Dividing customers into groups based on behavior, industry, size, or needs.
Customer Success
A function focused on ensuring customers achieve value from a product and remain long-term subscribers.
DAO Treasury Management
The governance-driven process of managing a decentralized autonomous organization's financial reserves, including budgeting, diversification, and capital allocation decisions.
Deal FOMO
Investor anxiety about missing a competitive deal that appears to be attracting strong demand.
Deal Flow CRM
A specialized customer relationship management system used by VC firms to track, evaluate, and manage the pipeline of potential investment opportunities from sourcing through closing.
Deal Sourcing
The process by which VCs identify and access new investment opportunities.
Defensibility
A company's ability to prevent competitors from replicating or overtaking its business.
Design Partner
An early customer that works closely with a startup to shape product development before broad launch.
Distressed Debt
Debt securities of companies in financial difficulty, trading at significant discounts to face value, which can be purchased as an investment strategy.
Distribution Advantage
A structural advantage in acquiring customers more efficiently than competitors.
Dogfooding
The practice of using your own product internally to test and improve it.
Double Bottom Line
An investment philosophy that evaluates success based on both financial returns and social or environmental impact, treating both as equally important objectives.
Due Diligence Checklist
A comprehensive list of items a VC reviews before making an investment, covering financials, legal, technology, market, and team aspects.
ESG
Environmental, Social, and Governance — criteria used by impact investors to evaluate companies beyond purely financial metrics.
Enterprise Sales
A sales strategy focused on large organizations with complex procurement processes.
Execution Risk
The possibility that a startup fails not because of market conditions but because the team cannot execute effectively.
FOMO
Fear of Missing Out — the psychological phenomenon in VC where investors rush to invest in hyped deals to avoid being left out of potentially large returns.
Feature Creep
The gradual addition of excessive product features that can complicate the product and dilute its value.
First Mover Advantage
The competitive benefit gained by being the first company to enter a market, though this advantage is often overstated.
Flywheel
A self-reinforcing growth loop where each element of the business drives the next — the more the flywheel spins, the harder it becomes to stop.
Founder Optionality
A situation where founders have multiple strategic paths available (raise more capital, sell, remain independent).
Founder-Market Fit
The degree to which a founder's background, expertise, and personal connection to a problem uniquely position them to solve it.
Fund Returner
A portfolio investment that by itself returns the fund's entire invested capital — typically requiring a 10-30x return depending on fund size and ownership.
Go-To-Market Channel
The specific distribution channel used to acquire customers (direct sales, marketplaces, partnerships).
Go-To-Market Fit
Alignment between a company's product and the channels used to sell it effectively.
Go-To-Market Motion
The repeatable system through which a company acquires customers and grows revenue.
Go-to-Market Strategy
The plan for how a company will reach and acquire customers, including pricing, channels, and sales approach.
Growth Hacking
Rapid, data-driven experimentation to find scalable, low-cost user acquisition strategies — associated with early-stage consumer tech companies.
Growth Loop
A self-reinforcing growth mechanism where existing users or actions generate additional users.
Growth at All Costs
A strategy of prioritizing revenue growth over profitability, often fueled by venture capital, with the assumption that scale will eventually drive margins.
Idea Maze
The complex set of decisions and strategic pathways a founder must navigate to build a successful company.
Impact Investing
Investing with the explicit intention of generating positive social or environmental impact alongside financial returns.
Impact-First vs Finance-First
A spectrum describing whether an impact investor prioritizes social/environmental outcomes or financial returns when the two objectives conflict.
Inflection Investing
An investment strategy focused on identifying companies at the point where growth is about to accelerate dramatically.
Innovation Arbitrage
Building new companies by applying existing technology or business models to underdeveloped markets.
Investment Committee Process
The formal decision-making workflow within a VC firm for evaluating and approving new investments, typically involving multiple stages of review by the partnership.
Investor Update
A periodic report sent by founders to investors summarizing company performance and needs.
Knowledge Arbitrage
Building companies by applying knowledge from one industry to another.
Lead Qualification
The process of determining whether potential customers are a good fit before investing time in the sales process.
Lead Qualification Funnel
The stages through which potential customers move before becoming paying customers.
Lean Startup
A methodology for building startups through rapid experimentation, validated learning, and iterative product development.
Long-Term Optionality
Maintaining strategic flexibility for future opportunities.
MVP
Minimum Viable Product — the simplest version of a product that allows a team to collect validated learning about customers with the least effort.
Market Expansion Strategy
Entering new geographic or industry markets to grow revenue.
Market Map
A visual overview of a startup ecosystem or market segment — mapping companies by category, stage, geography, or other characteristics.
Market Timing
The alignment between a startup's launch and the broader readiness of the market.
Missionary Founder
A founder motivated primarily by solving a specific problem rather than financial gain — considered more credible and resilient by many investors.
Moat
A sustainable competitive advantage protecting a company from competitors.
Monday Partner Meeting
The weekly all-partners meeting at a VC firm where new deal opportunities are presented, portfolio company updates are shared, and investment decisions are made.
Moral Hazard
The risk that someone will take greater risks because they don't bear the full consequences of their actions.
Multi-Product Company
A startup expanding beyond a single core product into multiple product lines to increase revenue and defensibility.
Narrative Investing
Investing decisions influenced by compelling stories about future market outcomes rather than current metrics.
Network Density
The strength of connections between users within a network product.
Network Density Effect
A strengthening of network effects as interactions between users increase.
Network Distribution
User acquisition driven by network interactions between customers.
Network Distribution Advantage
A growth advantage created through strong partnerships, integrations, or user networks.
Network Effects
The phenomenon where a product or service becomes more valuable as more people use it — one of the most powerful competitive moats in technology.
Operating Discipline
The consistent execution of processes and cost controls within a company.
Operational Excellence
Consistently strong execution across hiring, product, sales, and operations.
Optionality
The value of having multiple possible paths forward, allowing a company or investor to choose the best option as information unfolds.
Ownership Target
The percentage of a company that a VC fund aims to own after making an investment, typically used to determine check size.
PMF
Product-Market Fit — the degree to which a product satisfies strong market demand. When you have it, growth feels pull-based; when you don't, every customer feels like a push.
Pattern Recognition
A VC's ability to identify success signals in startups based on experience with similar companies, teams, and markets.
Pivot
A deliberate, strategic shift in a startup's product, market, business model, or core technology in response to evidence that the current direction isn't working.
Platform Model
A VC firm's organized approach to providing portfolio companies with operational support beyond capital, including talent, marketing, and business development resources.
Platform Risk
The risk of building a company dependent on another platform (e.g., Apple, Amazon, Google APIs).
Portfolio Concentration
How much of a fund's capital sits in its largest positions, and therefore how much a single outcome can move the fund's result.
Power Law
The mathematical principle underlying VC returns: a small number of exceptional investments generate most of a fund's returns, while most investments return little or nothing.
Pricing Power
The ability to raise price without losing enough volume to offset the gain, measured by what happens to revenue per customer and retention afterwards.
Product Differentiation
Distinct product characteristics that set a company apart from competitors.
Product-Market Fit
The degree to which a product satisfies strong market demand — typically evidenced by rapid organic growth, high retention, and users who would be very disappointed if the product disappeared.
Rollup Startup
A startup strategy focused on acquiring and consolidating many smaller companies in a fragmented market.
SDG Alignment
Tying a fund's or company's stated impact to named Sustainable Development Goal targets, and then measuring against them rather than against the goal logo.
Sales Funnel
The stages customers pass through from awareness to purchase.
Sales-Led Growth
A growth model driven primarily by outbound sales teams rather than product-led adoption.
Scalable Business Model
A model whose cost of serving the next customer is small relative to what that customer pays, so revenue can multiply while costs rise slowly.
Scale Advantage
Competitive advantage gained through larger operational scale.
Scaling Phase
The stage where startups focus on rapid growth after validating product-market fit.
Scout Program
A structured initiative where a VC firm empowers external operators, founders, or angels to source and invest in early-stage startups on the firm's behalf.
Selection Bias
A distortion in data or conclusions caused by non-random sampling, common in VC when analyzing success patterns.
Signal
An investor's reputation or prior success influencing other investors to participate in a round.
Signaling
The market signal sent by a VC's actions — most importantly, whether an existing investor participates (positive) or declines (negative) in a follow-on round.
Signaling Risk
The danger that an investor's decision (to invest or not) sends a negative signal to the market about a company.
Speed of Execution
The rate at which a startup builds product, hires, and enters markets.
Strategic Partnership
A collaboration between companies designed to accelerate growth.
Structural Alpha
Excess returns generated through unique structural advantages in how a fund operates rather than just better stock picking.
Super Pro Rata
An investment strategy where an existing investor invests more than their pro-rata share in a follow-on round to increase their ownership percentage, signaling high conviction in the company.
Survivorship Bias
The logical error of focusing only on successful outcomes while ignoring the many failures, distorting perceived probabilities.
TAM Expansion
A narrative used by startups to argue that their addressable market is larger than it appears today — either because they will expand into adjacent markets or because they will grow the market itself.
Tech Moat
A competitive advantage created through proprietary technology, infrastructure, or intellectual property.
Technology Adoption Curve
The timeline of how new technologies spread through markets.
Technology Risk
The possibility that a company's core technology will fail or be overtaken.
Thesis-Driven Investing
Investing from a written view about a specific change in the world, then sourcing against the companies that view predicts, rather than reacting to inbound deals.
Top-Down Investing
An investment approach starting with macro themes, sectors, or trends and then identifying companies positioned to benefit — opposite of bottom-up (company-first).
Total Addressable Value (TAV)
An expanded concept of TAM that includes additional value created through ecosystem effects.
Total Market Opportunity
The total potential economic value a company could capture in a market.
Unbundling
A startup strategy where a company breaks apart an existing platform or industry and focuses on a single component.
Value Capture
The ability of a company to convert market demand into revenue and profit.
Value Creation
The process of increasing a company's worth through revenue growth, margin improvement, or strategic positioning.
Value Creation Plan
A structured roadmap outlining specific initiatives to increase a portfolio company's value during the investment holding period.
Value Inflection Point
A specific milestone or achievement that causes a step-change increase in a company's valuation, such as product launch, regulatory approval, or key customer win.
Value Proposition
The core benefit or problem a product solves for its customers.
Value-Add Investing
An investment approach where the VC provides strategic support beyond capital to help portfolio companies succeed.
Value-Based Pricing
Pricing based on the value delivered to customers rather than the cost of production.
Velocity
The speed of execution across product development, hiring, and fundraising — used as a qualitative signal of a startup team's operating rhythm and competitive edge.
Venture Builder
An organization that creates startups from scratch using internal ideas, resources, and teams rather than investing in external founders.
Venture Scale
A business capable of reaching very large outcomes (often $1B+ valuations).
Vintage Year Diversification
The practice of spreading LP commitments across multiple fund vintage years to smooth returns and reduce market timing risk.
White Space Opportunity
An underserved market opportunity with limited existing competition.
Why Now
The key question a startup must answer: what has changed recently that makes this opportunity possible or necessary right now — as opposed to 5 years ago or 5 years from now.