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.

ag
search
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
Ownership Transition PlanningOwnership Transition Planning involves preparing for the transfer of a startup`s ownership or leadership, either through succession or sale, to ensure continuity.Owning SharesOwning Shares involves holding equity in a company, which represents a portion of ownership and possibly the right to vote on corporate matters.Pari-passuPari-passu is a financing term indicating that all investors or creditors are treated equally in a certain aspect of the deal.Participating Preferred StockParticipating Preferred Stock is a type of equity that allows holders to receive dividends equal to the common stockholders on an as-converted basis, after receiving their preferred dividends.Participation CapA Participation Cap limits the amount investors can receive in liquidation preferences, often used in preferred stock agreements to balance investor and founder interests.Participation RightsParticipation Rights allow investors to retain their proportionate ownership in a company by participating in subsequent funding rounds.PartnershipA Partnership refers to a business structure where two or more individuals manage and operate a business in accordance with the terms set out in the Partnership Agreement.Partnership MarketingPartnership Marketing involves collaborations between businesses to enhance their market visibility, share resources, and capitalize on each other`s strengths to achieve mutual benefits.Passive IncomePassive Income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.Passive InvestorA Passive Investor is an individual or entity that invests in a company but does not take an active role in management or daily operations, typically in exchange for regular income or dividends.PatentA Patent is a form of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of years.Patent PendingPatent Pending is a legal status indicating that a patent application has been filed with the patent office but has not yet been granted or rejected, offering some protection against copying.Patent PortfolioA Patent Portfolio is the collection of all the patents owned by a business or individual, representing a significant asset in protecting intellectual property.Pay-to-Play ProvisionA Pay-to-Play Provision requires existing investors to participate in future funding rounds to avoid dilution of their equity stake.Payback PeriodThe Payback Period is the time required for an investment to generate cash flow or profits equivalent to its cost, used to evaluate the feasibility of a project.Payment GatewayA Payment Gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, etc.Payment TermsPayment Terms are the conditions under which a seller will complete a sale, typically specifying the period allowed to a buyer to pay off the amount due.Payout PeriodThe Payout Period refers to the time frame in which an investment returns all its original capital back to the investor, also known as the payback period.Payout RatioThe Payout Ratio is a financial metric showing the proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of the company`s total earnings.Peer ReviewPeer Review is the evaluation of work by one or more people of similar competence to the producers of the work, which constitutes a form of self-regulation by qualified members of a profession.Peer-to-Peer (P2P) LendingPeer-to-Peer (P2P) Lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.Peer-to-Peer FundingPeer-to-Peer Funding is a method of debt financing that enables individuals to lend and borrow money directly from each other, bypassing traditional financial institutions.Penny StocksPenny Stocks are shares of small public companies traded at low prices per share, often considered highly speculative and risky.Performance BenchmarkingPerformance Benchmarking is the process of comparing a company`s performance metrics to industry standards or best practices to identify areas for improvement.Performance MetricsPerformance Metrics are specific measures used to quantitatively gauge the performance of a business, project, or individual in achieving objectives.Performance MilestoneA Performance Milestone refers to specific goals or achievements that a startup must reach, often tied to funding tranches or other contractual obligations.PerpetuityPerpetuity is a financial term describing an annuity that has no end, or a stream of cash flows that continues forever.Phantom EquityPhantom Equity is a non-traditional form of employee compensation that provides rights to the value of shares, such as stock options, but does not confer actual equity ownership in the company.Phantom StockPhantom Stock is a form of long-term incentive plan used by businesses to award employees with the benefits of stock ownership without giving them any actual stock.PipelineIn the startup and venture capital context, the Pipeline refers to the flow of potential deals or investment opportunities currently being considered or in progress.Pitch CompetitionA Pitch Competition is an event where entrepreneurs present their business ideas to a panel of judges to win funding, support, and feedback on their business model.Pitch DeckA Pitch Deck is a brief presentation used by startups to provide investors with a quick overview of the business plan, team, and financial projections.Pitching EventsPitching Events are organized gatherings where startups present their business ideas to potential investors, partners, and clients, aiming to secure funding or strategic relationships.PivotA Pivot refers to a strategic shift in a startup`s business model, product offering, or target market in response to feedback, market demand, or the realization of a more viable opportunity.Platform as a Service (PaaS)Platform as a Service (PaaS) is a cloud computing model that provides customers a platform allowing them to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an app.Platform IntegrationPlatform Integration refers to the process of combining and enabling interoperability between various software platforms, enhancing functionality and user experience.Pledge AgreementA Pledge Agreement is a legal document in which a borrower pledges certain assets as collateral to secure a loan, giving the lender rights to the collateral in the event of default.Pledge FundA Pledge Fund is an investment model where investors commit capital to a fund but have the discretion to choose which specific deals they invest in.Pledge ModelThe Pledge Model is a fundraising strategy where potential donors pledge to give a certain amount of money towards a project if certain conditions are met.Portfolio CompanyA Portfolio Company is a company or entity in which a venture capital firm, private equity firm, or investment fund has invested.Portfolio DiversificationPortfolio Diversification is an investment strategy that spreads investments across various financial instruments, industries, and other categories to reduce risk.Portfolio OptimizationPortfolio Optimization is the process of selecting the best portfolio (asset distribution), out of the set of all portfolios being considered, according to some objective.Portfolio StrategyA Portfolio Strategy is an investment strategy used by a company or investors to maximize the returns of an investment portfolio based on individual risk tolerance and goals.PositioningPositioning is the process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way.Positioning AnalysisPositioning Analysis is the process of identifying how a brand or product is perceived in the market relative to its competitors, focusing on its unique value proposition.Positioning StatementA Positioning Statement is a brief description of a product and its target market, outlining how the product fills a particular market need or niche better than its competitors.Post-Money ValuationPost-Money Valuation is the valuation of a company immediately after an investment has been made, calculated by adding the amount of the investment to the pre-money valuation.Pre-emption RightsPre-emption Rights give existing shareholders the right to buy additional shares before the company offers them to new investors, protecting against dilution of ownership.Pre-Incorporation AgreementA Pre-Incorporation Agreement outlines the proposed terms and conditions between parties intending to incorporate a company, detailing the business structure, initial investments, and roles.Pre-Market TradingPre-Market Trading refers to trading activity in the stock market that occurs before the official market trading session begins, often indicating the day`s market trends.