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Fundraising & Venture Capital

46 cards · 🇺🇸 English

Funding rounds and how startups raise money from investors.

businessentrepreneurshipventure-capital

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Venture capital (VC)

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1Venture capital (VC)
A form of private equity financing provided to startups and early-stage companies with high growth potential in exchange for equity ownership
2Typical VC investment time horizon
8-12 years, with the expectation of exiting through an IPO, acquisition, or secondary sale
3Pre-seed funding
The earliest round of financing to prove a new idea, often from friends, family, or angel investors
4Seed funding
Early-stage capital used to validate the concept, build a prototype, or conduct market research
5Series A round
The first significant institutional venture capital round, typically used to find product-market fit and scale operations
6Growth capital
Funding for later-stage companies (Series B, C, and beyond) to scale operations after achieving product-market fit
7Bridge financing
Short-term funding to bridge the gap between full VC rounds when current funds are running low
8Angel investor
An individual who provides capital to startups in exchange for equity, typically at earlier stages than VCs
9Equity crowdfunding
Raising capital from a large number of small investors through online platforms in exchange for equity
10Two and twenty" fee structure in VC
VCs typically charge a 2% annual management fee and take 20% of profits as carried interest
11Carried interest
The share of profits (typically 20%) paid to the fund's general partners as a performance incentive
12Term sheet
A non-binding document outlining the terms and conditions of an investment deal
13Pre-money valuation
The value of a company before receiving investment capital
14Post-money valuation
The value of a company after receiving investment capital (pre-money valuation + new investment)
15Dilution in fundraising
The reduction in existing shareholders' ownership percentage when new shares are issued
16Unicorn company
A privately-held startup valued at over $1 billion
17Exit strategy
How investors will eventually realize returns, typically through IPO, acquisition, or secondary sale
18IPO (Initial Public Offering)
When a private company first sells shares to the public, becoming publicly traded
19Due diligence
The investigation and evaluation process investors conduct before making an investment decision
20Product-market fit
When a product successfully satisfies a strong market demand
21Liquidation preference
The order and amount investors receive when a company is sold or liquidated
22Down round
A funding round where the company's valuation is lower than in the previous round
23Up round
A funding round where the company's valuation is higher than in the previous round
24General partner (GP) in a VC fund
The managers of the fund who make investment decisions and typically contribute 1-2% of the fund capital
25Limited partner (LP)
Passive investors in a VC fund who provide the majority of capital but don't make investment decisions
26Vintage year of a VC fund
The year when the fund closed and began investing, used to compare fund performance
27Burn rate
The rate at which a company spends its cash reserves, typically measured monthly
28Runway
The amount of time a company can operate before running out of cash, given its current burn rate
29Convertible note
A short-term debt instrument that converts into equity during a future funding round
30SAFE (Simple Agreement for Future Equity)
An investment instrument that converts to equity in future rounds without a maturity date or interest rate