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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Tender OfferA Tender Offer is a public proposal by an individual or entity to purchase a substantial percentage of a company`s shares directly from the shareholders, at a specified price and within a certain timeframe, often aiming for control or significant influence.TenorTenor refers to the duration until the maturity of a financial instrument, such as a bond or loan, indicating the time frame within which the principal must be repaid.Term ConversionTerm Conversion involves changing the terms of a financial instrument, such as converting a convertible note into equity shares during a startup`s equity financing round, according to predefined conditions.Term LoanA Term Loan is a bank loan for a specific amount with a set repayment schedule and either a fixed or variable interest rate. It`s used by startups for significant purchases or investments.Term SheetA Term Sheet is a non-binding document outlining the preliminary terms and conditions of an investment, serving as the basis for further negotiation and due diligence before finalizing the investment agreement.Test MarketA Test Market is a specific geographic region or demographic group used to trial and evaluate the market response to a product or service before a broader rollout, helping startups refine their offering and marketing strategy.Thematic InvestmentThematic Investment focuses on specific themes or trends anticipated to influence the market or industry, allowing investors to target investments in areas expected to experience growth or transformation.Third-Party RiskThird-Party Risk arises from relying on external parties for services or supplies, potentially impacting a startup`s operations, security, or reputation if those third parties fail to meet contractual or performance standards.Third-Party ValidationThird-Party Validation involves endorsements, certifications, or approvals from respected external sources, confirming the quality, viability, or innovation of a startup`s product, service, or business model.Threshold Pledge SystemThe Threshold Pledge System is a crowdfunding model where pledged funds are only collected if the project achieves its predefined funding target, ensuring that projects are financially viable before proceeding.ThroughputThroughput measures the volume of products or services produced or processed within a given time frame, indicating the efficiency and productivity of a startup`s operations.Tied FinancingTied Financing requires that funds provided for a project must be spent on goods or services from specific suppliers, often linked to the financing country, influencing the startup`s procurement decisions.Tiered PricingTiered Pricing is a strategy where a company offers different pricing levels for its products or services, based on features, usage levels, or service tiers, allowing customers to choose according to their needs and preferences.Time HorizonThe Time Horizon is the period over which an investment or financial goal is expected to be realized, influencing investment strategies and risk assessment for startups and investors.Time to MarketTime to Market measures the duration from a product`s conception to its availability to consumers, critical for startups in competitive markets to capture market share and meet customer demand promptly.Time Value of Money (TVM)The Time Value of Money principle states that a dollar today is worth more than a dollar in the future due to its potential earning capacity, influencing investment decisions and financial planning.Time-to-Break EvenTime-to-Break Even is the period it takes for a startup to reach a financial state where revenues equal expenses, marking the point at which the business becomes self-sustaining without relying on external funding.Token SaleA Token Sale is a fundraising event where a startup, often in the blockchain space, sells digital tokens to raise capital, providing investors with potential value or utility within the project`s ecosystem.TokenizationTokenization involves converting rights or assets into digital tokens on a blockchain, enabling easier and more secure transactions, often used in fundraising and asset management within blockchain projects.Top-down ForecastingTop-down Forecasting starts with broad market analysis and narrows down to specific industry and company insights, helping startups assess potential market size and set realistic sales targets.Top-line GrowthTop-line Growth refers to an increase in a company`s gross sales or revenues, demonstrating the startup`s ability to expand its market presence and attract more customers.Total Addressable Market (TAM)Total Addressable Market represents the overall revenue opportunity available for a particular product or service, estimating the maximum market demand and guiding startups in market entry and expansion strategies.Total Cost of Ownership (TCO)The Total Cost of Ownership encompasses all costs associated with acquiring, implementing, and operating a product or system throughout its lifecycle, aiding startups and customers in making informed purchasing decisions.Total FundingTotal Funding quantifies the aggregate amount of capital a startup has secured through all its funding rounds, reflecting the financial backing and investor confidence in the venture.Track RecordA Track Record documents a startup`s or entrepreneur`s past achievements, successes, and failures, providing investors with insights into their experience and potential for future success.TractionTraction demonstrates a startup`s progress and market acceptance through metrics such as user growth, revenue, and customer engagement, crucial for attracting further investment and partnerships.Traction ChannelsTraction Channels are the methods and platforms a startup utilizes to attract and retain customers, driving growth and market penetration. Effective use of diverse channels enhances visibility and accelerates startup growth.Trade BarrierA Trade Barrier refers to any regulation or policy that restricts international trade, affecting startups that operate in or plan to expand into global markets by potentially limiting their access to certain markets or increasing operational costs.Trade CreditTrade Credit refers to an agreement between businesses to purchase goods or services on account, without immediate payment, offering startups a way to manage cash flow effectively.Trade SaleA Trade Sale is the sale of a company`s shares or assets to another company or investor in the same industry, often pursued as an exit strategy by startups and investors.Trade SecretsTrade Secrets consist of confidential business information that provides an enterprise with a competitive edge, such as formulas, practices, processes, designs, instruments, patterns, or compilations of information.Trailing Twelve Months (TTM)The Trailing Twelve Months (TTM) is a period of time used for financial reporting that looks at the past 12 consecutive months, important for startups in providing a recent performance snapshot to investors.TrancheA Tranche is a portion of investment delivered to a startup at different stages, based on meeting previously agreed milestones, facilitating phased financing aligned with progress and achievements.Transaction CostsTransaction Costs refer to expenses incurred during the process of buying or selling securities or other financial instruments, which startups must consider in their funding strategies.Transitional CapitalTransitional Capital is capital provided to companies to bridge a temporary financial gap, which can be crucial for startups during pivot points or until achieving the next milestone.Transitional FundingTransitional Funding is short-term funding used to bridge a financial gap between rounds of financing or until a startup becomes cash flow positive.TransparencyTransparency is the practice of openly and honestly disclosing financial, operational, and strategic information to stakeholders, crucial for startups in building trust with investors and customers.Treasury ManagementTreasury Management involves the management of a company`s liquidity, ensuring it has enough cash to meet its obligations while optimizing interest and currency exposure.Treasury StockTreasury Stock consists of shares that were once part of the float and outstanding shares but were subsequently repurchased by the company.Trigger EventA Trigger Event is a specific condition or event that activates a clause in a financial agreement, such as the achievement of a milestone or a change in leadership, which can have implications for startup financing.Triple Bottom LineThe Triple Bottom Line is a sustainability framework that evaluates a company`s performance based on three Ps: profit, people, and the planet, increasingly important for startups seeking socially responsible investment.TrustA Trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.Turnaround TimeTurnaround Time is the time taken for a startup to complete a cycle of operations or to execute a specific task, often related to efficiency.Turnkey ProjectA Turnkey Project is a project that is designed, supplied, built, or installed fully complete and ready to operate, often appealing for startups looking to outsource parts of their operations or infrastructure.Turnkey SolutionA Turnkey Solution is a type of solution that is readily available to implement into a current business process or package, designed to fulfill a certain process such as accounting, or CRM processes.Two-Sided MarketA Two-Sided Market is a market platform where two distinct user groups provide each other with network benefits, crucial for businesses like marketplaces or social networks.Two-step VerificationTwo-step Verification is a security process in which the user provides two different authentication factors to verify themselves, important for startups in protecting sensitive financial information.Ubiquitous ComputingUbiquitous Computing refers to the integration of computing capabilities into everyday objects and activities, making technology seamlessly part of daily life.UGC MonetizationUGC Monetization refers to strategies implemented by startups to generate revenue from user-generated content, leveraging community contributions as a valuable asset.Ultimate Beneficial Owner (UBO)The Ultimate Beneficial Owner (UBO) is the person or entity that is the true owner of a company, even though the title may be in another name.