VC Glossary

Investment Roles/Entities

• Entrepreneur: A person who creates a new company, also known as a startup.

• Entrepreneur in residence (EIR): A person at a venture firm, usually a former entrepreneur, who helps the venture firm by finding deals to invest in or working on their next company that the venture firm will one day fund.

• Executive managing director: A senior partner in a venture capital firm who is superior to a managing director or general partner.

• Managing director (MD): A senior partner in a VC firm.

• Operating partner: A position at a VC firm that is normally under

• Venture capitalist (VC): A person who invests in startup companies.

• Venture partner: A position at a VC firm that is normally under managing director, but above principal.managing director, but above principal.

• Associate: An employee at a venture capital firm who is involved in deal analysis and management, often requiring support from a partner.

• Analyst: A junior-level employee at a venture capital firm who is responsible for deal analysis and other tasks.

• Angel investor: An individual who provides capital to a startup company using their own money.

• Director: A junior-level deal partner at a venture capital firm.

• Principal: A junior deal partner at a venture capital firm.

Capital Allocators

• Convertible debt: A debt or loan instrument given to a company with the intention that it will convert to equity later and not be paid back as a standard bank loan would be.

• Corporate venture capital: A venture firm sponsored and backed by a corporation, often but not always part of a publicly traded company.

• Accelerator: A program designed to support and accelerate the growth and success of startup companies by providing mentorship, resources, and networking opportunities.

• Accredited investor: A person who meets certain financial criteria and is legally permitted to invest in high-risk private company securities, including startup companies.

• Crowdfunding: The practice of funding a company by a group of individuals through equity purchase, debt purchase, pre-sale ordering of a product, or gifting of money.

• VC fund: A pooled investment vehicle that invests in private companies with the aim of generating high returns for its limited partners. Different from a VC firm.

• VC firm: A management company that raises and invests capital on behalf of one or more VC funds, which are used to invest money from limited partners into promising startups and high-growth companies.

• Family Office: A privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50-$100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations.

• Private Equity: The investment of capital in an entity that is not publicly listed or traded. These investments are typically made by firms and can range from $10 million to $1 billion or more in established companies.

• Private Credit: Debt financing provided by non-bank lenders to privately held companies that are not listed on public stock exchanges. The terms of private credit can vary widely, with interest rates typically ranging from 6% to 15%, and terms ranging from a few months to several years.

• Revenue-Based Financing: Debt financing refers to the practice of borrowing money to finance a business or project, with the understanding that the borrowed funds will be repaid with interest over a set period of time. Interest rates and terms for debt financing can vary widely depending on the lender, the amount borrowed, and the creditworthiness of the borrower.

• Micro VC: A super angel who raises a small fund made up of professional investors. They invest in startups at the seed or early-stage level. These firms typically invest smaller amounts of capital compared to traditional VC firms, with investments ranging from $25,000 to $500,000. The investment horizon for micro VC firms is usually shorter, with an expected hold period of 3-5 years.

• Angel/Angel Investor: An individual who invests their own money in a startup or early-stage company in exchange for an ownership stake. They typically provide smaller amounts of funding than venture capitalists, ranging from a few thousand to a few hundred thousand dollars.

• HNWI: High Net Worth Individuals with investible assets typically in excess of $1,000,000

• VHNWI: Very High Net Worth Individuals with investible assets typically in excess of $5,000,000

• UHNWI: Ultra High Net Worth Individuals with investible assets typically in excess of $30,000,000

• Angel Network: Group of angel investors who come together to pool their resources and invest in startups

• Syndicate: A group of investors who come together to make a single investment in a specific company or project. The investment is typically led by a single investor or investment firm, with the other members of the syndicate contributing smaller amounts of capital.

Financing Rounds

• Pre-Seed Round: The round before a seed round. This is now what the very first financing round in a company may be referred to as.

• Seed financing: A small financing that occurs before the Series A financing and is often the very first financing of a company.

• Series A financing: The first or early round of financing that a company raises.

• Growth Stage: The phase in a company's lifecycle when it has established a reliable customer base and steady revenue stream, resulting in a rapid increase in cash flow. This stage marks the beginning of significant expansion, and the company may need to hire more employees to manage the increased workload.

• IPO: (Initial Public Offering) the process of issuing a private corporation’s shares to the public market for the first time

• Acquisition: A transaction in which one company purchases another company.

• Party round: A financing round with many participants, usually at small dollar amounts each.

Stakeholders

• Investor: A stakeholder in a startup who provides capital in exchange for an ownership stake, with the expectation of earning a return on investment as the company grows.

• Entrepreneur: A founder of a startup who takes on significant risk to create a new business, with the goal of developing a product or service that meets a market need and generates revenue.

• Mentor: An experienced individual who advises and guides entrepreneurs in their efforts to build and grow their startups, providing knowledge and support that can help them avoid common pitfalls and achieve success.

• Advisor: An expert who provides specialized guidance to startups in areas such as strategy, marketing, product development, or fundraising, and who often brings a valuable network of contacts and industry knowledge to the table.

• Lawyer: A legal professional who advises startups on matters related to incorporation, intellectual property, employment law, contracts, and other legal issues that may arise during the course of building a business.

• Employee: An individual who is hired by a startup to contribute their skills and labor to the company in exchange for compensation, often in the form of salary, benefits, equity, or a combination of these.

• Customer: An individual or organization that purchases a startup's product or service, providing revenue that the company can use to fund growth and development.

• Business partners: Individuals or organizations that work with a startup to provide expertise, resources, or strategic value, often in exchange for equity or other forms of compensation. Business partners can include investors, suppliers, vendors, contractors, or other companies with complementary products or services.