Institutional Investor

Definition

Large organizations like pension funds, insurance companies, or endowments that invest in venture funds, adding legitimacy and money but no direct feedback.

Example Usage

Our Series B was co-led by two institutional investors alongside our existing VC partners.

Origin

Standard financial markets terminology

Fun Fact

Institutional investors often account for 80%+ of late-stage venture funding

Source: Standard venture capital terminology

Related Terms

Intermediate

Revenue Traction

Proof that actual humans are willing to pay actual money for your product, the ultimate validation for the venture capital community.

🚀 Startup / VC

Intermediate

LP (Limited Partner)

Institutions or individuals who invest capital into VC funds. The people whose retirement money is being gambled on whether your app will work.

🚀 Startup / VC

Advanced

equity kicker

Warrants or stock options added as sweetener to a debt deal, giving lenders upside if the company succeeds. Because apparently charging interest isn't enough—they want a piece of the action too.

🚀 Startup / VC

Intermediate

Churn Rate

The percentage of customers who cancel your service each month, also known as the number that keeps founders awake at 3 AM. A high churn rate means your product is a revolving door; a low one means customers haven't figured out how to find the cancel button yet.

🚀 Startup / VC

Intermediate

scout program

A system where VCs give small pools of capital to well-connected individuals to make investments on the firm's behalf. A brilliant way to outsource deal flow while paying in equity instead of salary.

🚀 Startup / VC

Intermediate

voting rights

The power to vote on corporate matters, typically held by common stock and sometimes special classes of preferred stock. Theoretically democratic, practically controlled by whoever wrote the term sheet.

🚀 Startup / VC

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