05 — Glossary

Every venture term, explained.

36 startup and venture terms — funding instruments, metrics, cap-table mechanics, process, exits — defined in plain English. Written for founders raising capital and for anyone trying to understand a term sheet for the first time.

Funding & instruments · 9

SAFE (Simple Agreement for Future Equity)
A SAFE is a short investment contract that gives an investor the right to receive shares in a future priced round, without setting a valuation today.
Convertible note
A convertible note is short-term debt that converts into equity when the company raises a future priced round.
Valuation cap
A valuation cap is the maximum valuation at which an early investment (SAFE or convertible note) will convert into equity, protecting the investor from being diluted if the company's valuation skyrockets.
Pre-money valuation
Pre-money valuation is what a company is worth before the new investment is added — used to calculate how much of the company the new investors are buying.
Post-money valuation
Post-money valuation is what a company is worth after the new investment is added (pre-money + the amount raised).
Pre-seed round
Pre-seed is the earliest formal funding stage, typically $50K–$500K raised on a SAFE before a company has revenue or product-market fit.
Seed round
A seed round is the first priced (or SAFE) financing of a startup, typically $1M–$5M raised to find product-market fit.
Series A round
A Series A is typically the first priced round led by an institutional VC, with a $5M–$20M check size, requiring strong evidence of product-market fit.
Bridge round
A bridge round is a small extension financing raised between two priced rounds, usually to extend runway and prove out metrics needed for the next bigger round.

Every venture term, explained.

Funding & instruments · 9

Metrics · 12

Cap table & equity · 8

Process · 4

Exits · 3