anti-dilution protection

Definition

A clause protecting investors from getting screwed when a company raises money at a lower valuation, automatically giving them more shares to maintain their investment value. Founders hate it; investors demand it.

Example Usage

The anti-dilution protection kicked in during the down round, giving our Series A investors an extra 5% of the company and diluting the founders into oblivion.

Origin

Corporate finance mechanism codified in venture capital term sheets during the 1970s

Fun Fact

There are two flavors: 'full ratchet' (brutal) and 'weighted average' (civilized)—the difference can cost founders 10-20% of their company.

Source: NVCA model term sheets and securities law documentation

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pro forma

Financial projections showing what a company's metrics would look like under hypothetical conditions or future scenarios. Latin for 'as a matter of form,' startup-ese for 'this is the fantasy we're selling investors.'

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moats

In medieval times, a water-filled ditch that kept invaders at bay; in modern business, the metaphorical competitive advantages that protect a company from rivals trying to steal its lunch money. Warren Buffett popularized this term to describe sustainable competitive advantages like strong brands, network effects, or regulatory barriers. The wider the moat, the harder it is for competitors to storm your castle and the more VCs will swoon over your pitch deck.

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rolling fund

A venture fund structure where capital commitments are made quarterly rather than in one large closing, allowing GPs to start investing immediately. The subscription model comes to venture capital.

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venturer

A fancy term for someone who invests in or undertakes risky business ventures, particularly in the startup ecosystem where optimism meets capitalism. These bold souls throw money and energy at unproven business ideas, hoping to strike gold before bankruptcy strikes them. It's like being an explorer, except instead of discovering new lands, you're discovering new ways to burn through Series A funding.

🚀 Startup / VC

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vesting cliff

The sadistic waiting period before any of your stock options actually belong to you, typically one year. It's designed to prevent you from taking the job and immediately quitting, essentially holding your compensation hostage for good behavior.

🚀 Startup / VC

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Runway

The amount of time a startup has before it runs out of money and crashes, much like an actual runway but with more crying. It's measured in months and discussed in board meetings with the same energy as a doctor delivering a terminal diagnosis.

🚀 Startup / VC

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