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The SAFE Note is a  Simple Agreement for Future Equity - a legal document template facilitating streamlined investments in early-stage companies, reducing the need for legal process and expense. Current templates are maintained by YCombi...

The SAFE Note is a  Simple Agreement for Future Equity - a legal document template facilitating streamlined investments in early-stage companies, reducing the need for legal process and expense. Current templates are maintained by YCombinator and available at https://www.ycombinator.com/documents The SAFE was originally created by Adeo Ressi to streamline early-stage investing with a standardized document, replacing bespoke convertible notes or priced rounds. It was popularized by YCombinator.

In startup investing, an SPV is a legal entity (usually an LLC) used to roll up smaller investments from multiple investors into a single investment, to provide access to a deal with a larger minimum investment. The person or entity mana...

In startup investing, an SPV is a legal entity (usually an LLC) used to roll up smaller investments from multiple investors into a single investment, to provide access to a deal with a larger minimum investment. The person or entity managing the SPV may charge fees or carry.

A company or investment fund that acquires and consolidates multiple smaller companies in a particular industry or sector. The goal of a roll-up vehicle is to create a larger and more diversified company with economies of scale, which ca...

A company or investment fund that acquires and consolidates multiple smaller companies in a particular industry or sector. The goal of a roll-up vehicle is to create a larger and more diversified company with economies of scale, which can then be sold or taken public.

"Pari passu" translates to "equal footing" or "on an equal basis."  In the investment context, it refers to situations where all investors have equal rights and privileges with respect to the assets and earnings of the company.

"Pari passu" translates to "equal footing" or "on an equal basis."  In the investment context, it refers to situations where all investors have equal rights and privileges with respect to the assets and earnings of the company.

Pro-rata rights give an investor in a company the right to participate in a subsequent round of funding to maintain their level of percentage ownership in the company.

Pro-rata rights give an investor in a company the right to participate in a subsequent round of funding to maintain their level of percentage ownership in the company.

Financial projections of a company's future performance. These projections are typically used to model different scenarios and assumptions, to estimate the future revenue, expenses, and profitability of a company and evaluate the potenti...

Financial projections of a company's future performance. These projections are typically used to model different scenarios and assumptions, to estimate the future revenue, expenses, and profitability of a company and evaluate the potential investment opportunity.

A priced round refers to a type of funding round where a startup company raises capital from external investors by selling ownership stakes (equity) in the company at a predetermined valuation. A priced round is commonly used in later st...

A priced round refers to a type of funding round where a startup company raises capital from external investors by selling ownership stakes (equity) in the company at a predetermined valuation. A priced round is commonly used in later stages of a company's growth when there is more data and information available to assess its value.

A type of loan offered by banks and nonbank lenders that is designed specifically for early-stage companies with venture capital backing.

A type of loan offered by banks and nonbank lenders that is designed specifically for early-stage companies with venture capital backing.

The investor who sets deal terms (which may include legal aspects) performs due diligence, organizes other investors. Best practice is for a lead to create a deal memo summarizing the key investment aspects of the opportunity. The lead u...

The investor who sets deal terms (which may include legal aspects) performs due diligence, organizes other investors. Best practice is for a lead to create a deal memo summarizing the key investment aspects of the opportunity. The lead usually, though not always is a significant (or largest) investor in the round, though minor investors also may take lead roles.

A valuation cap is the price ceiling at which a SAFE or convertible note will convert into equity (usually preferred stock) at a future financing round. Valuation caps are commonly used to bridge the gap between an early-stage investment...

A valuation cap is the price ceiling at which a SAFE or convertible note will convert into equity (usually preferred stock) at a future financing round. Valuation caps are commonly used to bridge the gap between an early-stage investment and a future priced round, providing a way for startups to raise capital while deferring the determination of an exact valuation until more information is available.

An outline document defining the terms of a following legal agreement.

An outline document defining the terms of a following legal agreement.

Refers to the maturity or development of a company. For example, a company in its early stages, such as a startup, may be considered a "seed stage" company, while a company that has grown and is approaching an initial public offering may...

Refers to the maturity or development of a company. For example, a company in its early stages, such as a startup, may be considered a "seed stage" company, while a company that has grown and is approaching an initial public offering may be considered a "later stage" company.

Bringing together multiple investors for a collective investment. The investors may invest individually or part of an organized syndicate investment vehicle (an SPV or Single Purpose Vehicle) where the organizer or facilitator collects f...

Bringing together multiple investors for a collective investment. The investors may invest individually or part of an organized syndicate investment vehicle (an SPV or Single Purpose Vehicle) where the organizer or facilitator collects fees or carry.

A "round" refers to a specific instance of funding that a startup company raises from external investors. For example, a company may raise money in a "seed round," a "series A round," and so on. These rounds of funding represent distinct...

A "round" refers to a specific instance of funding that a startup company raises from external investors. For example, a company may raise money in a "seed round," a "series A round," and so on. These rounds of funding represent distinct stages in a startup's growth and development, with each round aimed at securing capital to fuel various aspects of the business, such as product development, marketing, scaling operations, and more.

An implementation demonstrating a product for feasibility demonstration but generally not ready for customer deployment (which would be the Minimum Viable Product).

An implementation demonstrating a product for feasibility demonstration but generally not ready for customer deployment (which would be the Minimum Viable Product).

A Minimum Viable Product (MVP) is the most basic version of a product or service that can be created and released while still providing value to early users or customers. The primary goal of building an MVP is to quickly validate assumpt...

A Minimum Viable Product (MVP) is the most basic version of a product or service that can be created and released while still providing value to early users or customers. The primary goal of building an MVP is to quickly validate assumptions and test hypotheses about the product's viability, market demand, and potential for success with real-world users.

A follow-on investment is investing in a subsequent company fundraising round.

A follow-on investment is investing in a subsequent company fundraising round.

A flat round refers to a funding round in which a startup company raises capital at a valuation that is roughly the same or very similar to its previous funding round. In other words, the company's valuation remains "flat" or unchanged f...

A flat round refers to a funding round in which a startup company raises capital at a valuation that is roughly the same or very similar to its previous funding round. In other words, the company's valuation remains "flat" or unchanged from the previous round of investment. While a flat round may indicate challenges or cautious sentiment, it's important to note that securing funding, even at a consistent valuation, can still provide valuable capital to a startup. However, for startups seeking substantial growth and aiming to increase their valuation significantly, a flat round might not be the ideal outcome.

An exit is the sale or exchange of a significant amount of company ownership for cash (or for debt and/or equity of another company). Exits are a fundamental part of the venture capital investment cycle and allow investors to monetize th...

An exit is the sale or exchange of a significant amount of company ownership for cash (or for debt and/or equity of another company). Exits are a fundamental part of the venture capital investment cycle and allow investors to monetize their investments and generate returns on the capital they have deployed. For VCs, an acquisition and an IPO are the two basic exits of an investment.

What the investor does to evaluate a potential investment opportunity.

What the investor does to evaluate a potential investment opportunity.