Startup Fundraising Glossary

Navigate the world of startup financing with confidence

Explore a glossary of essential terms in startups, startup fundraising, bootstrapping and entrepreneurship. Decode the terminology and jargon with ease.

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A/B TestingA/B Testing is a method used by startups to compare two versions of a webpage or app against each other to determine which one performs better, often used to optimize product offerings or marketing strategies.Accelerated DilutionAccelerated Dilution is a situation where the ownership percentage of existing shareholders decreases faster than anticipated, often due to the issuance of new shares in funding rounds.Accelerated GrowthAccelerated Growth is the rapid expansion of a startup`s market share, revenue, or user base, typically resulting from effective product development, market strategy, or capital infusion.Accelerated VestingAccelerated Vesting is a provision in an employee`s stock option or equity plan that allows the employee to gain access to their equity or stock options more quickly than the original schedule, often triggered by specific events such as a sale of the company.AcceleratorAccelerator is a program that offers startups mentorship, resources, and often capital, in exchange for equity, designed to help startups grow rapidly.Accelerator CohortAccelerator Cohort is a group of startups participating in an accelerator program simultaneously, benefiting from shared learning experiences, mentorship, and networking opportunities.Accelerator Demo DayAccelerator Demo Day is an event at the end of an accelerator program where startups present their business to potential investors, aiming to secure funding and partnerships.Access to CapitalAccess to Capital is the startup`s ability to secure funds from external sources, including angel investors, venture capital firms, banks, and crowdfunding platforms, to finance its operations, growth, and expansion plans.Accession AgreementAccession Agreement is an agreement that outlines the terms under which a new partner or member joins an existing partnership or company, including any contributions to capital and adjustments to existing ownership structures.AccreditationAccreditation is the process by which a business or individual is certified to have met a set of industry or regulatory standards, often referring to accredited investor status in the context of investors.Accredited Crowdfunding PlatformAccredited Crowdfunding Platform is an online platform that allows accredited investors to invest in startups and small businesses, subject to regulatory compliance and investor qualification standards.Accredited InvestorAccredited Investor is an individual or business entity allowed to deal in securities not registered with financial authorities, recognized based on net worth, income, assets, or professional experience.AcquisitionAcquisition is the process of acquiring control of another company by purchase or stock exchange.Acquisition FinancingAcquisition Financing is funds that are specifically raised for the purpose of financing the acquisition of another company, asset, or key resource.Actionable MetricsActionable Metrics are key data points that provide insights which can be acted upon to improve a startup`s business model, product development, or market strategy.Active Funding RoundActive Funding Round is a current phase in which a startup is actively seeking and securing funds from investors, engaging in pitching, negotiations, and the execution of funding agreements.Active InvestorActive Investor is an investor who takes an active role in the management and decision-making processes of a startup, often in exchange for capital investment, contrasting with passive investors who do not involve themselves in management.Adaptive PricingAdaptive Pricing is a pricing strategy that adjusts based on market demand, competition, or customer profile, often used by startups to maximize revenue or market penetration.Add-on AcquisitionAdd-on Acquisition is an acquisition strategy where a company purchases smaller companies to add to its existing operations, enhancing its product offerings or expanding its market reach.Adverse SelectionAdverse Selection is a situation where sellers have information that buyers do not have, or vice versa, about some aspect of product quality. In the context of startups, it can refer to the challenge of attracting the right investors without revealing too much strategic information.Advisory BoardAdvisory Board is a group of external advisors providing strategic advice to a company`s management without authority to vote on corporate matters, unlike a Board of Directors.Advisory CapitalAdvisory Capital is a form of investment where, in addition to or instead of monetary support, investors provide expertise, mentorship, and industry connections to help a startup grow.Advisory EquityAdvisory Equity is equity granted to advisors of a startup in exchange for their guidance and expertise, typically issued as stock options or shares.Advisory SharesAdvisory Shares are equity shares allocated to advisors of a company in recognition of their guidance and advice, typically requiring less capital investment compared to traditional equity stakeholders.Affiliate AgreementAffiliate Agreement is a contract between two parties where one party agrees to promote the other`s products or services in exchange for a commission. Startups may use affiliate agreements to generate revenue or raise brand awareness.Affiliate MarketingAffiliate Marketing is a performance-based marketing strategy where a business rewards affiliates for each visitor or customer brought by the affiliate`s marketing efforts, often used by startups for cost-effective growth.Affiliate RevenueAffiliate Revenue is revenue generated through affiliate marketing where a startup earns commissions by promoting another company`s products or services.Agile CapitalAgile Capital is flexible funding that allows startups to adapt and pivot their business model based on market feedback without stringent use restrictions.Agile Development FundingAgile Development Funding is a funding strategy that supports the principles of agile development, allowing startups to iteratively develop products and adapt to market feedback, with financial backers that understand the need for flexibility and rapid pivots.Agile FundingAgile Funding is a financing strategy offering startups flexible funding options adaptable to the startup’s growth stages and milestones.AllocationAllocation is the process of distributing shares or capital among various investors or projects.Alpha FundingAlpha Funding is early-stage funding provided to startups to develop an alpha version of their product, demonstrating its feasibility and potential market value.Alpha InvestorsAlpha Investors are early-stage investors who are often the first to back a startup, providing not only capital but also mentorship and access to networks.Alpha VersionAlpha Version is the first version of a product, typically software, that is used internally to test and validate the concept before developing a more refined beta version. Demonstrating an alpha version can help attract early-stage investors by showing progress and potential.Alternative InvestmentAlternative Investment includes investments in assets other than stocks, bonds, and cash, such as real estate, hedge funds, venture capital, commodities, and tangible assets.Angel FinancingAngel Financing is a round of funding where angel investors provide capital to startups for early-stage development, in exchange for equity or convertible debt.Angel GroupAngel Group is an organized network of angel investors who pool their resources to invest in startup companies, providing not only capital but also mentorship and access to a wider network.Angel Investment NetworkAngel Investment Network is a group of angel investors organized to provide funding, mentorship, and advice to startups and entrepreneurs, often facilitating connections and pooling resources for investment opportunities.Angel InvestorAngel Investor is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity.Angel Investor SyndicateAngel Investor Syndicate is a group of angel investors who pool their capital to invest in startups, often led by a syndicate lead who coordinates the investment and represents the group in negotiations.Angel RoundAngel Round is a round of financing where angel investors provide capital to a startup in exchange for equity, typically occurring early in a company`s lifecycle.Angel SyndicateAngel Syndicate is a group of angel investors who pool their financial resources to invest in startups or early-stage companies, often led by a lead investor who negotiates the terms of the investment.Annual Recurring Revenue (ARR)Annual Recurring Revenue (ARR) is the amount of money that a company expects to receive from its customers annually for providing them with products or services, assuming all subscriptions continue over a full year.Annual Run RateAnnual Run Rate is an estimation of a startup`s revenue or expenses over a year, based on data from a shorter period. It`s often used to project future financial performance from current results.Anti-Dilution ProvisionsAnti-Dilution Provisions are legal provisions that protect investors from dilution of their ownership percentage if the company issues more shares at a lower price than previously paid.Anti-DilutiveAnti-Dilutive refers to financial transactions or corporate actions that do not decrease the ownership percentage of existing shareholders when new shares are issued.API MonetizationAPI Monetization is the process by which companies generate revenue through their APIs, either by charging for access or through indirect methods such as data insights services.Application Programming Interface (API) EconomyApplication Programming Interface (API) Economy is the marketplace that emerges when companies expose their digital services or functionalities through APIs, enabling startups to develop new technologies or services on top of existing platforms.Articles of IncorporationArticles of Incorporation is a document establishing the existence of a corporation, spelling out its purpose, authorized share capital, and other operational rules.Artificial Intelligence (AI) FundingArtificial Intelligence (AI) Funding are investments specifically directed towards startups and businesses developing or utilizing AI technology for their products, services, or operational improvements.