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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SponsorA Sponsor is an individual, corporation, or organization that provides financial support, resources, or expertise to a startup, often in exchange for equity, promotional opportunities, or strategic benefits.StakeholderStakeholders are parties with an interest in a company`s success, including employees, investors, customers, suppliers, and the community. They influence and are affected by the startup`s operations and outcomes.Stakeholder EngagementStakeholder Engagement involves actively involving key individuals, groups, or organizations in a startup`s decision-making processes, ensuring their input and concerns are considered in business activities and strategic planning.Startup BootstrappingStartup Bootstrapping refers to launching and growing a business using personal finances, operational revenues, and minimal external funding. It emphasizes self-sufficiency and financial discipline in early-stage development.Startup Burn RateThe Startup Burn Rate is the speed at which a startup spends its capital on overhead and operational costs before reaching a sustainable revenue model. It`s a key metric for understanding financial health and runway.Startup ConsortiumA Startup Consortium is a collaborative group of startups that pool resources, share knowledge, and leverage collective networks to accelerate growth and overcome common challenges in the startup landscape.Startup EcosystemThe Startup Ecosystem encompasses the network of startups, investors, mentors, service providers, and other stakeholders who collectively support, finance, and drive the growth of new business ventures.Startup IncubatorA Startup Incubator is an organization that offers support services and resources to early-stage startups, including office space, mentorship, and access to a network of investors and experts, to help them develop and succeed.Startup MilestoneA Startup Milestone is a significant achievement or goal that marks a key point in a startup`s development path. Milestones are used to measure progress, assess performance, and guide future strategic decisions.Startup PortfolioThe Startup Portfolio represents the collection of investments or startups that an investor, venture capital firm, or incubator supports. It reflects the diversity and strategic focus of the investor`s interests and commitments.Startup ValuationStartup Valuation is the process of determining the worth of a startup, often challenging due to limited financial history and uncertainty about future prospects. It involves assessing potential for growth, market size, and competitive advantage.Stock OptionsStock Options are rights granted to employees, advisors, or consultants to purchase shares of the company at a predetermined price. They serve as an incentive, aligning their interests with the company`s success.Stock Purchase AgreementA Stock Purchase Agreement is a legal contract that outlines the terms of a share transaction, specifying the number of shares sold, the price, and other conditions of the sale between the buyer and the seller.Strategic AllianceA Strategic Alliance is a cooperative agreement between two or more entities to pursue a set of agreed-upon objectives while remaining independent organizations. It leverages the strengths of each for mutual benefit.Strategic ExitA Strategic Exit is a planned strategy for founders and investors to sell their stake in a startup or the entire company to achieve significant returns on investment. It often involves selling to a larger company or going public.Strategic FundingStrategic Funding involves securing investments from partners who provide not only capital but also strategic benefits such as expertise, market access, and technological resources to support the startup`s growth and development.Strategic InvestorA Strategic Investor is typically a large corporation that invests in a startup with the intention of forming a strategic partnership, often to access new technologies, markets, or products.Strategic PartnershipA Strategic Partnership is a collaborative agreement between two or more companies to work together towards common goals while remaining independent entities, often involving shared resources, markets, or technologies.Strategic Partnership AgreementA Strategic Partnership Agreement formalizes the cooperation between a startup and another company, outlining the terms of their collaboration, which may include equity exchanges, shared resources, or joint development projects.Strategic RoundA Strategic Round of financing is a funding round where startups raise capital from partners who offer strategic advantages beyond mere financial support, such as access to new markets, technologies, or distribution channels.Structured EquityStructured Equity refers to complex investment arrangements that combine elements of equity and debt, often including preferred shares, convertible notes, or warrants, designed to provide protection and benefits to investors.Subordinated DebtSubordinated Debt is a type of loan that ranks below other debts and loans in terms of claims on assets or earnings. It is repaid only after other debts have been settled in the event of a liquidation or bankruptcy.Subscription AgreementA Subscription Agreement is a contract between a company and an investor that outlines the terms for purchasing shares in a private placement, including the investment amount, price per share, and other conditions.Subscription ModelThe Subscription Model is a business strategy where customers pay a recurring fee, usually monthly or annually, for continuous access to a product or service. It provides a predictable revenue stream for companies.Success FeeA Success Fee is a fee paid to an advisor, broker, or investment banker upon the successful completion of a transaction, such as a funding round or acquisition, often calculated as a percentage of the deal value.Super Angel InvestorA Super Angel Investor is an affluent and influential angel investor with a significant track record of successful investments, often providing substantial early-stage capital and expertise to startups.Supply Chain FinancingSupply Chain Financing refers to a set of solutions that optimize cash flow by allowing companies to lengthen their payment terms to suppliers while providing the option for their suppliers to get paid early.Sustainability MetricsSustainability Metrics are measurements used to assess and report on a company`s environmental, social, and governance (ESG) performance, indicating its commitment to sustainable business practices.Sweat CapitalSweat Capital, similar to sweat equity, represents the non-monetary investment made by founders and early team members in the form of labor, effort, and dedication to the startup, contributing to its value.Sweat Capital CommitmentSweat Capital Commitment is an agreement wherein founders or team members agree to contribute their time, effort, and expertise to the startup in exchange for equity, recognizing the value of non-financial contributions.Sweat EquitySweat Equity is equity awarded to founders, employees, or advisors in recognition of their contributions in the form of work, effort, and expertise, rather than monetary investment, to the startup`s development.Sweat Equity AgreementA Sweat Equity Agreement outlines the terms under which individuals will receive equity in exchange for their labor and contributions to the startup, detailing the amount of equity awarded and any vesting conditions.Sweat LoanA Sweat Loan is an agreement where repayment may involve providing services or labor in lieu of traditional financial repayment, often utilized in early-stage startups with limited cash resources.SyndicateA Syndicate is a group of investors, often led by a venture capital firm, that pools resources to invest in startups, spreading the risk and potentially increasing the investment`s impact.Syndicated InvestmentA Syndicated Investment involves multiple investors collaborating to fund a startup, pooling their financial resources under the leadership of one or more lead investors, enabling larger funding rounds.Syndication RightsSyndication Rights pertain to the collective investment rights and agreements among a group of investors participating in a syndicate, outlining the terms of their collaboration and investment.Systematic Investment PlanA Systematic Investment Plan allows individuals to invest a fixed amount regularly into a specific investment, facilitating disciplined saving and investment over time.Systemic RiskSystemic Risk is the risk that an event at the company level could trigger severe instability or collapse in an entire industry or economy, highlighting the interconnectedness of financial systems.Tactical Business PlanA Tactical Business Plan focuses on the short-term actions and strategies required to achieve immediate business goals, emphasizing specific steps and measurable outcomes.Tag-Along RightsTag-Along Rights protect minority shareholders by allowing them to join in when a majority shareholder sells their stake, ensuring they can sell their shares under similar terms.Talent AcquisitionTalent Acquisition is the strategic process of finding and hiring skilled personnel to meet the organizational needs of a startup, encompassing sourcing, recruiting, and onboarding talent.Tangible AssetsTangible Assets are physical and measurable assets owned by a company, such as equipment, inventory, and real estate, which can be used as collateral for financing or valued in the company`s balance sheet.Tangible Net WorthTangible Net Worth is the sum of a company`s physical assets minus its liabilities and intangible assets like goodwill. It provides a measure of the company`s value derived from its tangible resources.Target MarketThe Target Market is the specific group of consumers identified as the intended audience for a product or service, based on characteristics like demographics, interests, and behaviors.Tax CreditsTax Credits are financial incentives that reduce the amount of tax owed by a business or individual, encouraging investment in certain activities, such as research and development or renewable energy projects.TeardownA Teardown is a detailed disassembly and analysis of a product to understand its components, manufacturing cost, and design features, often used for competitive analysis and product improvement.TeaserA Teaser is a preliminary marketing document providing a brief overview of a company or investment opportunity to potential investors, designed to spark interest without disclosing detailed information.Teaser RateA Teaser Rate is an attractively low initial interest rate offered on a loan or credit product, which typically adjusts to a higher rate after a certain period, used to attract borrowers.Technology StackThe Technology Stack refers to the combination of technologies a startup uses to build and deploy its applications, including programming languages, frameworks, databases, and servers.Technology TransferTechnology Transfer is the process of sharing or disseminating technology between different organizations, such as universities and companies, to enable broader access to and application of scientific and technological developments.