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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Financial MetricsFinancial Metrics are standardized measurements used to evaluate a company`s financial health, including EBITDA, cash flow, and profitability ratios.Financial ModelFinancial Model is a tool designed to represent a startup`s expected financial performance and position, based on assumptions about the future.Financing RoundFinancing Round is the process through which a startup raises capital from investors or lenders in exchange for equity or debt, to fund operations, growth, or expansion projects.First-Mover AdvantageFirst-Mover Advantage is the competitive advantage gained by the initial significant occupant of a market segment.Fixed AssetFixed Asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income.Fixed Asset TurnoverFixed Asset Turnover is a financial ratio that measures a company’s efficiency in generating sales from its fixed assets, indicating how well the business uses its investment in physical assets.Flash FundingFlash Funding refers to quick or sudden financial injections into a startup, often to capitalize on immediate opportunities or address urgent needs.Flash SaleFlash Sale is a marketing and sales strategy involving the offering of goods or services at significantly reduced prices for a short period of time.FlippingFlipping in the startup context refers to the act of buying undervalued assets or companies and quickly selling them for a profit.Follow-on FundingFollow-on Funding is additional investment made in a company following initial capital infusions, to support further growth, development, or to bridge the company to profitability.Follow-on InvestmentFollow-on Investment refers to additional funding provided by investors who have previously invested in the company, typically to support continued growth.Follower FundingFollower Funding is a concept where startups receive funding not just from traditional investors but also from their customers or users, often through platforms like Kickstarter.FOMO MarketingFOMO Marketing, leveraging the `Fear Of Missing Out,` is a strategy to evoke anxiety that an exciting or interesting event may currently be happening elsewhere, often used to prompt immediate action.Founder VestingFounder Vesting is the process by which a founder earns their equity over time, protecting the company’s long-term interests by encouraging founders to remain committed.Founder’s AgreementFounder’s Agreement is a legal document outlining the roles, responsibilities, equity ownership, and other terms agreed upon by the founders of a startup.Founder`s EquityFounder`s Equity refers to the ownership interest allocated to the founders of a startup, typically represented in shares.Founders` StockFounders` Stock are the original shares issued to the creators of the company, often subject to vesting conditions to ensure founders remain committed to the business.Founding TeamFounding Team refers to the group of individuals who start a company, bringing together diverse skills, expertise, and visions for the venture’s success.FranchiseFranchise is a method of business expansion where a company (franchisor) licenses its business model and brand to an independent operator (franchisee).Franchise FeeFranchise Fee is an initial cost paid by a franchisee to a franchisor for the rights to use the franchisor`s brand, system, and ongoing support in operating the business.Free Cash FlowFree Cash Flow is the amount of cash a company generates after accounting for capital expenditures, reflecting the financial health and profitability of a business.FreemiumFreemium is a business model where basic services are provided free of charge while more advanced features or services are offered at a premium.Friends and Family RoundFriends and Family Round is an early stage of financing where startup founders obtain capital from personal connections to support initial business operations.Fully Diluted SharesFully Diluted Shares are the total number of shares that would be outstanding if all possible sources of conversion, such as stock options and convertible bonds, were exercised.Fund AllocationFund Allocation is the strategic distribution of raised capital into various business operations, investments, or reserves to support growth and sustainability.FundableFundable is a characteristic of startups that are attractive to investors due to their market potential, business model, team, or technology.Funding CycleFunding Cycle is the continuous process of raising capital, utilizing it for growth, and then seeking additional funding based on new valuations.Funding EfficiencyFunding Efficiency is a measure of how effectively a startup uses the capital it raises to generate growth and achieve its objectives, indicating the startup`s potential for sustainability and success.Funding GapFunding Gap is the difference between a startup`s current level of funding and the amount it needs to reach the next stage of growth or to become self-sustaining.Funding PlatformFunding Platform is an online service that connects startups with potential investors, facilitating fundraising through equity, debt, rewards, or donation-based campaigns.Funding RoundFunding Round is a stage during which a startup seeks financial investment from outside sources to fuel its growth and operations.Fundraising StrategyFundraising Strategy is a planned approach to securing the financial resources necessary for a startup’s growth, outlining targets, methods, timelines, and stakeholders involved.General Business RiskGeneral Business Risk is the broad exposure to uncertainty from factors like market fluctuations, competition, and management decisions that startups must manageGeneral Data Protection Regulation (GDPR) ComplianceGeneral Data Protection Regulation (GDPR) Compliance is the process startups undergo to ensure their data handling practices are in line with the EU`s GDPR requirements, crucial for those operating or serving customers in EuropeGeneral Partner (GP)General Partner (GP) in a venture capital or limited partnership is the partner who takes on the day-to-day management responsibilities and has unlimited liability for the debts of the partnershipGeneration Z ConsumersGeneration Z Consumers are the demographic cohort following Millennials, characterized by comfort with technology and digital environments, targeted by startups as a key market segment with distinct behaviors and preferencesGenerational MarketingGenerational Marketing are marketing strategies designed to appeal to specific generations by understanding their preferences, values, and behaviors, used by startups to tailor their marketing effortsGenerative AIGenerative AI is artificial intelligence that can generate content, such as text, images, or music, that is novel and creative, with startups focusing on generative AI attracting significant investment interestGenerative DesignGenerative Design is the use of algorithms and artificial intelligence to generate design options based on specific criteria and constraints, enabling rapid prototyping and innovation in product developmentGeographic DiversificationGeographic Diversification is the strategy of expanding a company`s operations or sales efforts across different geographical regions to reduce risk and tap into new market opportunitiesGeographic ExpansionGeographic Expansion is the strategy of growing a business by entering new geographic markets, significant for startups looking to scaleGlobal Startup EcosystemGlobal Startup Ecosystem is the worldwide network of startup entrepreneurs, investors, incubators, and support services that collectively contribute to the growth and development of innovative companies across bordersGlobalizationGlobalization is the process of businesses developing international influence or operating on an international scale, enabling startups to expand operations or customer base beyond bordersGo-To Market FundingGo-To Market Funding refers to financial resources allocated specifically for launching a product or service to the market, including budget for marketing, sales, distribution, and customer support to ensure a successful launchGo-to-Market (GTM) StrategyGo-to-Market (GTM) Strategy is a plan that specifies how a company will reach target customers and achieve a competitive advantage. It includes sales, marketing, distribution, pricing, brand development, and customer support strategiesGo-to-Market BudgetingGo-to-Market Budgeting is the process of allocating financial resources specifically for the purpose of launching a product or service into the market, including marketing, distribution, sales efforts, and customer supportGoal Alignment in VenturesGoal Alignment in Ventures is the process of ensuring that the objectives of the startup align with those of its investors, stakeholders, and team members to promote unity of direction and purposeGoing PublicGoing Public is the process of a company`s shares being offered to the public for the first time through an Initial Public Offering (IPO)Golden HandcuffsGolden Handcuffs are incentive packages offered to key employees to encourage them to stay with a company for a certain period, including stock options, bonuses, and other financial benefitsGolden ParachuteGolden Parachute is a large financial compensation package guaranteed to a company executive if they are terminated or the company is acquired, serving as risk mitigation for executives