Disruption / Disruptive Innovation

Definition

A new product or service that fundamentally changes how an industry operates—a term VCs use so often it's become meaningless.

Example Usage

Our AI-powered laundry app is going to be absolutely disruptive to the $100B textile care industry.

Origin

Coined by Clayton Christensen in 'The Innovator's Dilemma' (1997).

Fun Fact

The term 'disruption' has been so overused that it's often applied to minor product improvements.

Source: Innovation theory and venture capital terminology

Related Terms

Intermediate

Check Size

The amount of money a VC firm typically invests in a single startup. Larger firms write bigger checks, which shapes their investment thesis.

🚀 Startup / VC

Advanced

drag-along rights

A contractual provision that lets majority shareholders force minority investors to join in selling the company, whether they like it or not. Democracy dies in cap tables.

🚀 Startup / VC

Beginner

ventures

Risky business undertakings or investments that could either make you rich or teach you expensive lessons about market dynamics. In startup speak, it's what venture capitalists fund, hoping that one unicorn will make up for the nine failures. Think of ventures as business experiments where the hypothesis is "this will make money" and the results are usually mixed.

🚀 Startup / VC

Intermediate

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.'

🚀 Startup / VC

Advanced

signaling

The information conveyed to the market by investor actions, such as who leads a round or whether insiders participate in follow-ons. In startup land, subtext is text.

🚀 Startup / VC

Intermediate

capital call

The formal demand from a general partner to limited partners to wire their committed funds, usually with 10-30 days notice and an implied "or else" hanging in the air. It's how venture funds move committed money from promised to deployed.

🚀 Startup / VC

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