The language of venture capital
80 terms in plain English — from carry and capital calls to liquidation preferences and continuation funds. Search or filter by category.
80 terms
409A Valuation
Cap Table & Equity
Independent appraisal of common stock that sets option strike prices.
Acquihire
Exits & Liquidity
An acquisition for the team, usually a modest outcome for investors.
Anchor LP
Fundraising & LPs
A large early LP whose commitment de-risks the raise.
Anti-Dilution Protection
Cap Table & Equity
Repricing protection for investors if a cheaper round happens.
Board Seat
Portfolio & Ops
A director position, usually taken by the round's lead.
Bridge Round
Deal Terms
Interim financing to extend runway to the next round.
Cap Table (Capitalization Table)
Cap Table & Equity
The ledger of a company's ownership, security by security.
Capital Call (Drawdown)
Fundraising & LPs
GP's request for LPs to fund part of their commitment.
Carried Interest (Carry)
Fund Structure
The GP's share of fund profits, usually 20%.
Continuation Fund
Exits & Liquidity
A new GP-led vehicle that buys assets out of an aging fund.
Convertible Note
Deal Terms
A loan that converts into equity at the next round.
Deal Flow
Portfolio & Ops
The stream of investment opportunities reaching the firm.
Dilution
Cap Table & Equity
Ownership shrinkage as new shares are issued.
Direct Listing
Exits & Liquidity
Going public by listing existing shares, no new capital raised.
Discount
Deal Terms
A percentage off the next round's price for early investors.
Distribution
Fundraising & LPs
Cash or stock the fund returns to its investors.
Down Round
Deal Terms
A round priced below the previous round's valuation.
DPI (Distributions to Paid-In)
Returns & Metrics
Cash returned to LPs divided by cash paid in.
Drag-Along Rights
Cap Table & Equity
A majority can force all holders to join an approved sale.
Emerging Manager
Fundraising & LPs
A GP on roughly Fund I-III, usually sub-scale by institutional standards.
First Close
Fundraising & LPs
The moment a fund can legally start investing.
Follow-On
Portfolio & Ops
Investing again in an existing portfolio company.
Full Ratchet
Cap Table & Equity
Aggressive anti-dilution that fully reprices to the down round.
Fund Life
Fund Structure
The fund's contractual duration, typically 10 years plus extensions.
Fund of Funds (FoF)
Fundraising & LPs
A fund that invests across many other venture funds.
General Partner (GP)
Fund Structure
The entity (and people) managing the fund and making investment decisions.
GP Commit
Fund Structure
Capital the managers invest in their own fund, typically 1-2%.
Graduation Rate
Portfolio & Ops
The share of portfolio companies that raise the next round.
Information Rights
Portfolio & Ops
Contractual right to regular company financials and updates.
Investment Period
Fund Structure
The first 3-5 years, when the fund can make new investments.
IPO (Initial Public Offering)
Exits & Liquidity
Going public: the marquee venture exit, with a lockup before liquidity.
IRR (Internal Rate of Return)
Returns & Metrics
Annualized return that accounts for cash-flow timing.
J-Curve
Returns & Metrics
Early negative returns before the winners emerge.
Key Person Clause
Fund Structure
LP protection if the named partners stop running the fund.
Lead Investor
Deal Terms
The investor who prices the round, writes the biggest check, and takes the board seat.
Limited Partner (LP)
Fund Structure
A passive investor who supplies the fund's capital.
Limited Partnership Agreement (LPA)
Fund Structure
The master contract governing a fund's terms and economics.
Liquidation Preference
Cap Table & Equity
Preferred investors get paid back before common in an exit.
Loss Ratio
Returns & Metrics
The share of invested capital written off.
Management Company
Fund Structure
The firm entity that employs staff and collects the management fee.
Management Fee
Fund Structure
Annual fee (often ~2%) that funds firm operations.
Markup
Portfolio & Ops
An unrealized increase in a holding's carrying value.
MFN (Most Favored Nation)
Deal Terms
Right to inherit better terms given to later investors.
MOIC (Multiple on Invested Capital)
Returns & Metrics
Value returned as a multiple of capital invested, ignoring time.
No-Shop Clause
Deal Terms
Term-sheet exclusivity while the round is documented.
Option Pool (ESOP)
Cap Table & Equity
Equity reserved for employee grants, typically 10-20%.
Ownership Target
Portfolio & Ops
The entry stake a fund aims to hold in each company.
Participating Preferred
Cap Table & Equity
Preferred that takes its money back and then shares in the rest.
Party Round
Deal Terms
A round of many small checks with no lead.
Pay-to-Play
Cap Table & Equity
Fund the new round or lose your preferred rights.
Placement Agent
Fundraising & LPs
A firm that helps a GP raise capital from LPs, for a fee.
Post-Money Valuation
Deal Terms
Company value after the round: pre-money plus new capital.
Power Law
Returns & Metrics
A few outliers drive nearly all venture returns.
PPM (Private Placement Memorandum)
Fundraising & LPs
The fund's formal offering and disclosure document.
Pre-Money Valuation
Deal Terms
Company value before the new money comes in.
Preferred Stock
Cap Table & Equity
The share class investors buy, with preferences over common.
Priced Round
Deal Terms
An equity round at a negotiated valuation with a new preferred class.
Pro Rata Rights
Deal Terms
The right to keep your ownership percentage in future rounds.
Protective Provisions
Portfolio & Ops
Preferred stockholders' veto rights over major actions.
QSBS (Qualified Small Business Stock)
Cap Table & Equity
Tax exclusion on gains from qualifying early-stage C-corp stock.
Recycling
Fund Structure
Reinvesting early exit proceeds instead of distributing them.
Reserves
Portfolio & Ops
Capital held back for follow-on rounds.
ROFR (Right of First Refusal)
Cap Table & Equity
Insiders get first shot at buying shares before outsiders.
RVPI (Residual Value to Paid-In)
Returns & Metrics
Unrealized portfolio value per dollar paid in.
SAFE (Simple Agreement for Future Equity)
Deal Terms
A convertible contract that turns into equity at the next priced round.
Secondaries
Exits & Liquidity
Selling existing stakes — fund interests or company shares — before exit.
Side Letter
Fundraising & LPs
A per-investor agreement granting bespoke terms.
Signaling Risk
Deal Terms
When an insider's pass on the next round scares off new investors.
SPAC (Special Purpose Acquisition Company)
Exits & Liquidity
A listed shell company that takes a startup public via merger.
SPV (Special Purpose Vehicle)
Fund Structure
A single-deal vehicle that pools investors for one company.
Tag-Along Rights (Co-Sale)
Cap Table & Equity
If a founder sells shares, investors can sell alongside.
Tender Offer
Exits & Liquidity
A structured, company-run window to sell shares to an approved buyer.
Term Sheet
Deal Terms
The non-binding outline of a proposed investment's key terms.
TVPI (Total Value to Paid-In)
Returns & Metrics
Total realized plus unrealized value per dollar paid in.
Unicorn
Returns & Metrics
A private startup valued at $1B or more.
Valuation Cap
Deal Terms
The maximum valuation at which a convertible instrument converts.
Vesting
Cap Table & Equity
Earning equity over time, standardly 4 years with a 1-year cliff.
Vintage Year
Returns & Metrics
The year a fund starts investing, used for benchmarking.
Warehousing (Warehoused Deals)
Fundraising & LPs
Doing deals before the fund closes, then transferring them in at cost.
Weighted Average Anti-Dilution
Cap Table & Equity
The standard, proportionate anti-dilution formula.