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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Pre-Money ValuationPre-Money Valuation is the valuation of a company prior to an investment or financing event, which determines how much of the company new investors will own following their investment.Pre-Seed FundingPre-Seed Funding is an early investment aimed to help startups conduct market research and develop their product before they are ready to raise seed funding.Preemptive OfferA Preemptive Offer is an offer made to existing shareholders giving them the opportunity to buy additional shares before the company offers them to new potential investors.Preferential AllotmentA Preferential Allotment is a process by which shares are allotted to a select group of investors (often existing shareholders) at a predetermined price, usually at a discount to the market price.Preferred CreditorA Preferred Creditor is a creditor receiving priority over other creditors in terms of the payment from a debtor, especially in bankruptcy proceedings.Preferred ReturnA Preferred Return is a profit distribution mechanism whereby preferred investors receive returns on their investment before any other class of shareholders.Preferred StockPreferred Stock represents equity shares that have preferential rights over common stock, including dividends and liquidation rights, often used in venture financing.Press ReleaseA Press Release is an official statement issued to newspapers giving information on a particular matter, used as a tool for startups to announce product launches, partnerships, or achievements.Price RoundA Price Round is a funding round where the investment is made at a specific valuation, setting the price per share for new investors.Pricing ModelA Pricing Model is the strategy or method used by a company to determine the best price for its products or services, considering factors like costs, demand, and competition.Pricing StrategyA Pricing Strategy is the method a startup uses to set prices for its products or services, based on factors like cost, market demand, competition, and business objectives.Primary MarketThe Primary Market is the market where securities are created and sold for the first time without involving intermediaries, facilitating capital raising by companies and governments.Primary OfferingA Primary Offering is the initial issuance of shares by a company to the public, leading to the collection of capital directly from investors.PrincipalThe Principal refers to the original sum of money borrowed in a loan, or the amount of the investment that is not subject to interest.Private EquityPrivate Equity refers to investment funds, firms, or investors that directly invest in private companies, often resulting in significant ownership stakes.Private Investment in Public Equity (PIPE)Private Investment in Public Equity (PIPE) is a type of investment in which private investors buy shares of publicly traded stock at a discount to the current market price.Private LabelPrivate Label refers to products manufactured by one company for sale under another company`s brand, often seen in consumer goods.Private MarketThe Private Market refers to the part of the financial market involving transactions of securities that are not publicly traded, often accessible only to qualified investors.Private OfferingA Private Offering is a funding round where securities are sold not through a public offering, but rather through a private placement to a small number of chosen investors.Private PlacementA Private Placement is the sale of securities to a relatively small number of select investors as a way of raising capital, without the need to register the securities with the SEC.Private SyndicationPrivate Syndication is a funding approach where a group of private investors pools resources to invest in a venture, often facilitated by a lead investor or investment firm.Pro FormaPro Forma is a method by which financial results are calculated based on certain projections or presumptions, often used in valuations and financial modeling.Pro-Rata RightsPro-Rata Rights give investors the right to participate in future funding rounds to maintain their percentage of ownership in the company.Product DevelopmentProduct Development is the complete process of bringing a new product to market, from ideation through design, development, and finally, launch.Product DifferentiationProduct Differentiation is the process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.Product InnovationProduct Innovation is the development and market introduction of a new, redesigned, or substantially improved good or service, differentiating a company from its competitors.Product LifecycleThe Product Lifecycle is the cycle through which every product goes through from introduction to withdrawal or eventual demise.Product RoadmapA Product Roadmap is a high-level visual summary that maps out the vision and direction of a product offering over time, communicating the why and what behind the product.Product ScalingProduct Scaling refers to the process of expanding a product`s capabilities or availability to meet an increasing demand in the market, often involving strategic planning and resource allocation.Product ValidationProduct Validation is the process of testing a product concept with potential users to ensure it meets market needs and has a viable demand before fully launching it.Product ViabilityProduct Viability refers to the potential of a product to meet market needs effectively, sustainably, and profitably, often assessed through market research and early user feedback.Product-Market FitProduct-Market Fit occurs when a product satisfies a strong market demand and is a key indicator of potential for startup success.Professional InvestorA Professional Investor is an individual or entity deemed to have sufficient experience, expertise, and financial acumen to make informed investment decisions.Profit and Loss StatementA Profit and Loss Statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.Profit ForecastA Profit Forecast is an estimate of the future profitability of a business, predicting upcoming income, expenses, and net profits.Profit MarginA Profit Margin is a financial ratio used to calculate the percentage of profit a company produces from its total revenue, indicating the efficiency at generating profits.Profit SharingProfit Sharing is a plan that gives employees a share in the profits of the company, typically as part of their compensation package, encouraging ownership behavior and loyalty.Profitability AnalysisProfitability Analysis is the assessment of the ability of a business to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.Project FinancingProject Financing is a funding method in which lenders provide money for the development of a project solely based on the projected cash flows, with the project`s assets, rights, and interests as collateral.Project ManagementProject Management is the discipline of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria.Project SponsorA Project Sponsor is an individual or group that provides financial resources, support, and guidance for a project, often holding accountability for its success.Promissory NoteA Promissory Note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.Proof of Concept (PoC)A Proof of Concept is a demonstration to verify certain concepts or theories have the potential for real-world application, often before full-scale production or development.Proof of Stake (PoS)Proof of Stake is a type of consensus mechanism used by blockchain networks to achieve distributed consensus, where the creator of a new block is chosen via various combinations of random selection and wealth or age.Prospective InvestorA Prospective Investor is an individual or entity showing interest in investing in a startup but has not yet committed capital, typically in the early stages of the fundraising process.ProspectusA Prospectus is a formal legal document that companies must file before going public, detailing the investment offering for the public and containing financial data, risks, and objectives.PrototypeA Prototype is an early sample, model, or release of a product built to test a concept or process, serving as a thing to be replicated or learned from.Public DebtPublic Debt refers to money or credit owed by any level of government; it can also refer to the total amount of money owed by a company to creditors in the form of bonds.Public MarketThe Public Market refers to the marketplace for the buying and selling of publicly traded securities, including stock exchanges and over-the-counter markets.Public OfferingA Public Offering refers to the process of offering shares of a private corporation to the public in a new stock issuance, allowing the company to raise capital from public investors.