fund velocity

Definition

The speed at which a venture fund moves through its investment cycle, from raising capital to deploying it to returning capital to LPs. Faster isn't always better—ask anyone who inhaled their food and got heartburn.

Example Usage

Their fund velocity was impressive: they raised in 6 months, deployed in 2 years, and returned 3x by year 7.

Origin

Finance terminology adapted from inventory and capital efficiency metrics

Fun Fact

High fund velocity lets GPs raise subsequent funds faster (and collect more fees), creating incentives that don't always align with maximizing LP returns.

Source: Fund management and institutional investment operations

Related Terms

Beginner

bootstrapped

Building a company with personal savings, credit cards, and stress ulcers instead of venture capital—either a badge of honor or an excuse for slow growth, depending on your exit results. It's entrepreneurship on hard mode.

🚀 Startup / VC

Intermediate

reserve allocation

Capital set aside by a VC fund to support existing portfolio companies in future rounds. The difference between investing in 20 companies and actually having money to help the 2-3 that work.

🚀 Startup / VC

Advanced

down round protection

A contractual mechanism that shields early investors from dilution when a startup raises money at a lower valuation than previous rounds. It's basically insurance against your company becoming less cool than you thought it was.

🚀 Startup / VC

Intermediate

Exit Strategy

The plan for how founders and investors will eventually cash out, ranging from IPO to acquisition to quietly shutting down and pretending it never happened. It's planning your escape route before you've even built the building.

🚀 Startup / VC

Intermediate

monetise

The delicate art of figuring out how to extract money from something that users currently enjoy for free, typically resulting in a barrage of ads, paywalls, or premium subscriptions. This verb represents the moment when platforms transition from "community-building" to "shareholder-pleasing," often coinciding with users complaining that everything good gets ruined. Monetization strategies range from subtle to obnoxious, but they all share the goal of turning engagement into revenue.

🚀 Startup / VC

Intermediate

diluting

The act of reducing ownership percentage by issuing new shares, or what happens to founders' equity every time VCs open their checkbooks. In chemistry, it means adding solvent to weaken a solution; in startup world, it means your 50% stake just became 30% and you're supposed to smile because the company is now "worth more." The most expensive way to raise money without technically losing money.

🚀 Startup / VC

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qltm

quietly laughing to myself...