The Venture and Startup Glossary is a collection of terms used in building, financing, and operating startups and venture-backed companies. It gives founders, operators, and investors a shared vocabulary for equity, financing, and venture models.
Glossary
0-9
- 📝83(b) Election — An IRS filing that lets the recipient of restricted stock pay tax on its value at grant rather than as it vests, a classic 📝Specialized Digital Micro Tasks example.
B
- 📝Branded Venture Capital — A venture capital firm chartered to invest in the ecosystem of a platform, such as the $200m iFund Kleiner Perkins announced for the iPhone.
C
- 📝Convertible Note — An investment that converts into equity at a future priced round, using a discount and a valuation cap to reward early investors without the time and expense of setting a valuation now.
D
- 📝Deferred Salary Bridge Note — A mechanism that lets employees defer part of their salary into equity at a preferential rate when the company wants to conserve cash and extend runway.
E
- 📝Eat the Work — Companies that centralize and systematize distributed labor, performing core parts of a professional's work so they can concentrate on more essential tasks.
- 📝Entrepreneur — A person who organizes and operates a business venture, taking on greater than normal financial risk in order to do so.
- 📝Entrepreneur in Residence — A program at 📝BrightZen Systems that makes space for exceptional individuals to create a Profitable Revenue Stream and then potentially a new business.
F
- 📝Fully Diluted Shares Outstanding — The total number of common shares a company would have outstanding once every convertible security and stock option is exercised, the denominator for calculating ownership.
G
- 📝Granting Equity — The ways a company issues ownership, from founder common stock and restricted stock to stock options, warrants, and public-company restricted stock grants.
I
- 📝Inevitable Unicorn — A venture-backed company that we believe will be worth more than $1 billion someday.
K
- 📝keiretsu — A set of companies with interlocking business relationships and shareholdings, centered on a core bank, that insulates its members from market swings and takeover attempts.
M
- 📝Management Fee Plus Carry — The economics of venture capital, private equity, and hedge fund general partners: an annual fee on fund size plus a share of gains above a hurdle rate, as in "2 and 20."
- 📝Micro-Private Equity — Acquiring small businesses, often in distressed situations such as tenants struggling under a lease, and operating them through recovery.
P
- 📝Portfolio Companies — John's name for all of the businesses and partnerships he and his partners support in any capacity, widening the venture-capital sense beyond ownership.
- 📝Profitable Owned Channel — A sales channel that generates leads for a business while also generating cash from related Profitable Revenue Streams, so the channel pays for itself.
- 📝Profitable Revenue Stream — A method of generating revenue that brings in more money than it costs to create, the fundamental unit of an operating business.
R
- 📝Rule of 40 — The principle that a software company's combined growth rate and profit margin should exceed 40%.
S
- 📝Specialized Digital Micro Tasks — The small, tool-specific tasks that make up many jobs today, each requiring some combination of education, training, and problem-solving experience.
- 📝Stock Options — The right, but not the obligation, to buy company stock at a set strike price for a period of time, the traditional way venture-backed companies let employees build equity.
- 📝Strategic Transaction — A company-defining transaction such as raising capital, acquiring a company, or selling your company.
V
- 📝Venture Activist — A next-generation accelerator, incubator, and angel network empowering non-venture-backed startups.
- 📝Venture Factoring — Lending against the invoices a completely new product can reasonably be expected to generate, the extreme form of advanced factoring.
- 📝Venture Operating Company — A company that builds a portfolio of productized revenue streams, in contrast to a venture capital firm whose general partners invest limited partners' capital for Management Fee Plus Carry.
- 📝Virtual Cap Table — A method of tracking each team member's contributions of time, valued at their full-time rate, to a startup before it exists.