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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Bridge to Series ABridge to Series A is short-term financing intended to carry a startup through until it can secure a more substantial Series A funding round.Budget VarianceBudget Variance is the difference between the budgeted or baseline amount of expense or revenue, and the actualBuilt to ScaleBuilt to Scale describes startups designed from the outset to grow quickly and efficiently, often making them more attractive to investors seeking high-growth potential opportunities.Burn RateBurn Rate is the rate at which a startup spends its venture capital to finance overhead before generating positive cash flow from operations.BurnoutBurnout in the startup context refers to the point at which a company`s operating expenses exceed its capital, leading to a critical need for additional funding.Business AcceleratorBusiness Accelerator is a program that offers development resources, mentorship, and sometimes capital to startups to speed up their growth and success.Business AngelBusiness Angel is an affluent individual who provides capital for a startup, usually in exchange for convertible debt or ownership equity.Business Angels NetworkBusiness Angels Network is a collective of individual investors interested in financing promising startups in exchange for equity stakes.Business IncubationBusiness Incubation is a support process that accelerates the successful development of startup and fledgling companies by providing entrepreneurs with an array of targeted resources and services.Business NetworkingBusiness Networking refers to the process of establishing a mutually beneficial relationship with other business people and potential clients or customers, critical for fundraising and growth.Business PlanBusiness Plan is a detailed document that describes in detail how a business, usually a new one, is going to achieve its goals. It lays out a written plan from a marketing, financial, and operational viewpoint.Business TractionBusiness Traction is evidence that a company`s products or services are gaining acceptance in the marketplace, often used to attract investors by demonstrating growth potential.Business ValuationBusiness Valuation is the process of determining the economic value of a startup or an established business, often necessary for fundraising, investment analysis, and selling the business.Buy-InBuy-In refers to the agreement by an investor to participate in a funding round, typically involving the purchase of a startup`s equity.Buy-Sell AgreementBuy-Sell Agreement is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies, is forced to leave theBuyback AgreementBuyback Agreement is a contract that allows a company to repurchase shares from shareholders, often used to consolidate ownership or provide an exit for early investors.BuyoutBuyout refers to the purchase of a company`s shares in which the acquiring party gains control of the targeted firm. It often involves purchasing a majority stake in the company.C CorporationC Corporation is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.Cap TableCap Table, short for capitalization table, is a spreadsheet or table that shows the equity capitalization for a company.Capital AllocationCapital Allocation refers to the process of distributing financial resources among different departments, projects, or investments to maximize profitability and growth.Capital EfficiencyCapital Efficiency is the measure of how effectively a company uses its capital to generate revenue.Capital GainsCapital Gains are the profits from the sale of an asset — shares of stock, a piece of land, a business — and are generally considered taxable income.Capital RequirementCapital Requirement is the amount of capital a bank or financial institution must hold as required by its financial regulator. For startups, it refers to the minimum amount of capital needed to start and run the business efficiently.Capital StructureCapital Structure is the composition of a company`s liabilities and equity, detailing how it finances its overall operations and growth through different sources of funds.Capital Under ManagementCapital Under Management refers to the total amount of capital or assets that a management team is responsible for overseeing.Capped NotesCapped Notes are a form of convertible note used in financing that has a maximum valuation at which the notes will convert into equity.Capped RateCapped Rate is an interest rate that has a maximum limit on the rate that can be charged, regardless of market fluctuations.Cash Burn RateCash Burn Rate is the rate at which a startup expends its cash reserves before generating positive cash flow from operations.Cash Flow ForecastCash Flow Forecast is an estimation of the money expected to flow in and out of a business over a certain period, helping startups plan for future financial positions.Cash Flow PositiveCash Flow Positive indicates that a company`s cash inflows exceed its cash outflows.Cash Flow StatementCash Flow Statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.Catalyst FundingCatalyst Funding refers to an initial investment meant to support and accelerate a startup`s growth until it can achieve self-sustainability or secure further funding.Certification of IncorporationCertification of Incorporation is a legal document related to the formation of a corporation or company. It is a license to form a corporation issued by the state government.Chapter 11Chapter 11 refers to a chapter of the U.S. Bankruptcy Code that involves the reorganization of a debtor`s business affairs and assets.Chapter 7Chapter 7, a part of the U.S. Bankruptcy Code, deals with asset liquidation of a debtor company to repay creditors.Charge-OffCharge-Off is the declaration by a creditor that an amount of debt is unlikely to be collected, indicating that it is considered "bad debt" and written off the books.Chief Financial Officer (CFO)Chief Financial Officer (CFO) is a senior executive responsible for managing the financial actions of a company, including tracking cash flow and financial planning.Churn PredictionChurn Prediction is the process of identifying customers who are likely to cancel a subscription to a service. It`s vital for startups to minimize customer loss and maximize retention strategies.Churn RateChurn Rate is a business metric that calculates the number of customers who leave a product over a given period of time, divided by the remaining number of customers.Class A SharesClass A Shares refer to a classification of common or preferred shares that typically carry specific privileges, such as more voting rights.Clean Term SheetClean Term Sheet is a term sheet with straightforward, uncomplicated terms that all parties can agree on, often with fewer clauses that could potentially delay negotiations.Client AcquisitionClient Acquisition is the process of bringing new clients or customers to a business through various marketing and outreach strategies.Cliff VestingCliff Vesting is a term used in stock compensation that refers to the practice of vesting employee stock options all at once after a certain period of service.Co-founder AgreementCo-founder Agreement is a legal document that outlines the relationship among founders, including their roles, ownership, and what happens if someone leaves.Co-InvestmentCo-Investment is a situation where two or more investment entities join together to invest in a particular project.Collaborative FundingCollaborative Funding is a method where multiple entities come together to fund a project or venture, pooling resources for mutual benefit.CollateralCollateral is an asset that a borrower offers to a lender to secure a loan.Competitive AdvantageCompetitive Advantage is a condition or circumstance that puts a company in a favorable or superior business position.Competitive AnalysisCompetitive Analysis is an assessment of the strengths and weaknesses of current and potential competitors, providing both an offensive and defensive strategic context.Conversion RateConversion Rate in the context of startups refers to the percentage of users who take a desired action, pivotal for evaluating the effectiveness of marketing strategies and product offerings.