Must-Know Venture Capital Terms for Entrepreneurs

  • Accelerator: A program that provides mentorship and support to startups and early-stage companies. Accelerators typically last for a few months and culminate in a demo day where startups pitch to investors.
    Startup accelerator
  • Bootstrapping: The process of starting and growing a company without outside funding. Bootstrappers typically rely on their own savings and revenue to grow their businesses.
    Bootstrapping startup
  • Bridge round: A round of funding between two major funding rounds.
  • Burn rate: The rate at which a startup is spending money. Burn rates are typically calculated on a monthly basis.
    Burn rate startup chart
  • Conversion rate: The percentage of visitors to a startup’s website who convert into customers. Conversion rates are important for startups that rely on online sales.
    Conversion rate startup chart
  • Crowdfunding: A type of fundraising where startups raise money from a large number of small investors. Crowdfunding platforms such as Kickstarter and Indiegogo allow startups to raise money from individuals who are interested in their products or services.
    Crowdfunding startup platform
  • Decacorn: A startup company valued at over $10 billion.
  • Down round: A round of funding in which a startup company raises money at a lower valuation than in its previous round of funding.
  • Due diligence: A process that investors go through to assess the risks and potential rewards of an investment. VCs typically conduct due diligence on a startup’s business plan, financial projections, management team, and market.
    Due diligence startup process
  • Exit strategy: A plan for how investors will eventually exit their investment in a company. Common exit strategies include selling the company to another company (acquisition), taking the company public (IPO), or liquidating the company.
    Exit strategy startup diagram
  • Financial projections: A forecast of a startup’s future financial performance. Financial projections are used by investors to assess the risks and potential rewards of an investment.
    Financial projections startup chart
  • Hectocorn: A startup company valued at over $100 billion.
  • Investment terms: The terms and conditions of a venture capital investment, such as the amount of money invested, the ownership stake received, and the liquidation preference.
  • Investment thesis: A statement that explains an investor’s investment strategy. Investment theses typically include the types of companies the investor invests in, the investment stage, and the return profile.
    Investment thesis startup diagram
  • Late-stage funding: Funding for a startup company that is close to profitability or has already reached profitability.
  • Liquidation preference: A provision in a venture capital investment agreement that gives VCs priority over other investors when a company is liquidated or sold.
  • Pitch deck: A presentation that startups use to pitch their businesses to investors. Pitch decks typically include information about the startup’s product or service, market, management team, and financial projections.
    Pitch deck startup presentation
  • Portfolio company: A company in which a venture capitalist has invested.
  • Seed funding: The initial round of funding for a startup company.
  • Series A funding: The first major round of funding for a startup company, typically used to finance product development and marketing.
  • Series B funding: A subsequent round of funding for a startup company, typically used to expand the company’s reach and operations.
  • Term sheet: A non-binding document that outlines the key terms and conditions of an investment. Term sheets are typically negotiated between investors and startups before a final investment agreement is signed.
    Term sheet startup template
  • Unicorn: A startup company valued at over $1 billion.
  • Unit economics: A financial model that startups use to assess the profitability of each unit they sell. Unit economics are important for startups to understand how much they need to charge for their products or services in order to be profitable.
Unit economics startup model
  • Valuation: The process of determining the worth of a startup or early-stage company. VCs use a variety of methods to value companies, such as discounted cash flow analysis and comparable company analysis.
  • Venture capital (VC): A type of private equity and risk capital investment that provides funding and support to startups and early-stage companies with high growth potential. VCs typically invest in companies that are too risky for traditional lenders such as banks.
  • Venture capitalist (VC): An investor who provides venture capital to startups and early-stage companies. VCs are typically wealthy individuals or institutions, such as pension funds and university endowments.


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Cameron Long