Death Spiral

Definition

When a startup's problems compound faster than solutions can be implemented. The financial equivalent of a black hole with ping-pong tournaments.

Example Usage

Once our biggest customer left, we entered a death spiral: shrinking revenue, mass layoffs, and plummeting morale.

Source: Startup industry analysis

Related Terms

Intermediate

Preferred Stock

The special shares VCs get that have extra rights and protections—the VIP section of the cap table.

🚀 Startup / VC

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control premium

The additional value investors pay for governance rights and control provisions beyond pure economics, willing to pay higher prices for board seats and veto powers. The surcharge for not trusting founders to run the company they founded.

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Knockout

A deal term that prevents certain actions without investor approval. The clause that prevents your CEO from going rogue.

🚀 Startup / VC

Intermediate

tiger global-ing

Making investment decisions at lightning speed with minimal diligence, named after Tiger Global's spray-and-pray approach during the 2020-2021 bubble. High velocity, low conviction, maximum FOMO.

🚀 Startup / VC

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SAFEs (Simple Agreements for Future Equity)

A legal instrument creating a right for investors to purchase equity in a future priced round at favorable terms. Y Combinator's attempt to make early-stage investing 'simple' (it's not).

🚀 Startup / VC

Advanced

catch-up provision

A term in VC fund agreements where once LPs get their initial investment back, GPs get an accelerated share of profits until their normal split is reached. Basically letting the manager 'catch up' to their 20% after paying back investors.

🚀 Startup / VC

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