Everything you need to know about raising capital, equity structures, and investor terms.
An independent appraisal of a private company's common stock fair market value, required for issuing stock options.
Interest that accumulates on convertible notes over time, typically converting to additional equity.
Protection that adjusts an investor's share price if the company later raises money at a lower valuation.
The governing body responsible for major company decisions, composed of founders, investors, and independent members.
Short-term funding to extend runway until the next equity round or specific milestone.
Short-term financing to extend runway until a larger funding round closes, typically from existing investors.
A document showing company ownership, including all shareholders, share counts, ownership percentages, and security terms.
The share of investment profits that fund managers receive as compensation, typically 20% of gains.
A waiting period before any equity vests, typically one year, protecting companies from early departures.
Basic ownership shares with voting rights but no special preferences, typically held by founders and employees.
A valuation method that determines company value by comparing financial multiples to similar public or private companies.
A percentage reduction in share price that convertible investors receive when converting to equity.
A debt instrument that converts to equity in a future funding round, featuring interest accrual and a maturity date.
A fund performance metric showing actual cash returned to investors relative to invested capital.
The reduction in ownership percentage when new shares are issued, occurring during funding rounds and equity grants.
A percentage reduction on the next round's share price for SAFE or convertible note holders, rewarding early risk.
A valuation method that estimates business value by projecting future cash flows and discounting them to present value.
Vesting acceleration that requires both a company acquisition AND termination of employment to trigger.
A funding round where the company raises money at a lower valuation than its previous round.
A provision allowing majority shareholders to force minority shareholders to join in the sale of a company.
The comprehensive investigation of a company by potential investors or acquirers before completing a transaction.
The price an option holder pays to convert options into shares, set at fair market value when granted.
The total share count if all convertible securities converted to common stock, showing true ownership percentages.
The year a venture fund began investing, used to compare performance across different market cycles.
The fund managers who make investment decisions, manage portfolio companies, and have unlimited liability.
The annualized return rate that makes the net present value of all cash flows equal to zero.
Investor rights to receive regular financial and operational updates from the company.
Investors who provide capital to venture funds but don't participate in investment decisions.
The right of preferred shareholders to receive their investment back before common shareholders in a sale or liquidation.
The annual fee VC funds charge to cover operating expenses, typically 2% of committed capital.
The deadline by which a convertible note must be repaid or converted to equity.
A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives.
A percentage of company equity reserved for future employee stock option grants, typically 10-20% of fully diluted shares.
Preferred stock that receives its liquidation preference plus participates pro-rata in remaining proceeds with common shareholders.
A requirement that investors participate in future funding rounds or face conversion of preferred stock to common stock.
The value of a company immediately after receiving new investment, calculated as pre-money valuation plus investment amount.
The value of a company before receiving new investment, used to calculate how much equity investors receive for their capital.
A class of stock with special rights including liquidation preference and anti-dilution protection, typically held by investors.
The right for existing investors to participate in future funding rounds to maintain their ownership percentage.
Veto rights given to preferred shareholders over specific major company decisions.
The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.
The right to match any offer a shareholder receives before they can sell to a third party.
An investment agreement that converts to equity in a future funding round, featuring a valuation cap and/or discount without debt terms.
A fund performance metric showing total value (realized + unrealized) relative to invested capital.
A provision allowing minority shareholders to join a sale if majority shareholders sell their stake.
A non-binding document outlining the key terms of a proposed investment before final legal documents are drafted.
The maximum valuation at which a SAFE or convertible note converts to equity, protecting early investors from excessive dilution.
The timeline over which equity ownership is earned, typically 4 years with a 1-year cliff before any shares vest.
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