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VC Glossary

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VC Glossary

What is an SPV?

SPVs allow investors to pool their money together to invest in a single company.

VC Glossary

What is a SAFE?

SAFEs give an investor the right to convert their SAFE into equity at the company’s next equity financing round or liquidation event.

VC Glossary

What is a Convertible Note?

Convertible notes are a type of loan that gives investors the right to convert their debt into equity at a predetermined event.

VC Glossary

What is a Liquidation Preference?

Liquidation preferences dictate the order and amount investors get paid when there's an exit.

VC Glossary

What are Pro Rata Rights?

Pro rata rights can help investors maintain their ownership stake in a startup as it grows.

VC Glossary

What is Anti-Dilution Protection?

Anti-dilution provisions help protect investors’ shares from losing value in a ‘down round.’

VC Glossary

What Are Protective Provisions?

Protective provisions give preferred shareholders the right to veto specific corporate actions that could impact their investment.

VC Glossary

What are Drag Along Rights?

Drag along rights give the majority shareholder(s) the power to compel minority shareholders to participate in an acquisition.

VC Glossary

What is a Right of First Refusal?

A right of first refusal gives its holders “first dibs” on any share sale in a startup.

VC Glossary

What is a Down Round?

A down round is when a startup raises money at a pre-money valuation that is lower than the post-money valuation of its previous round.

VC Glossary

What are Advisory Shares?

Advisory shares refer to equity compensation offered to a startup’s advisors.

VC Glossary

What is a Pay-to-Play Provision?

Pay-to-play provisions incentivize investors to participate in a new fundraising round either by negatively impacting investors who opt not to participate or rewarding investors who choose to participate.

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