Knockout

Definition

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

Example Usage

Our financing agreement includes knockouts on hiring over $500K, raising debt over $1M, and any strategic partnerships.

Origin

Venture capital legal terminology, evolved from protective clauses

Fun Fact

The broadest knockouts are usually negotiated away—founders resist having every decision subject to investor veto.

Source: Venture capital legal terminology

Related Terms

Beginner

MVP (Minimum Viable Product)

A half-baked version of your product with just enough features to validate whether customers actually want it—or to prove they don't.

🚀 Startup / VC

Intermediate

SOM

Serviceable Obtainable Market—what you can realistically capture in the first 3-5 years. It's the intersection of TAM, SAM, and aggressive optimism.

🚀 Startup / VC

Advanced

Equity Dilution

The process by which your ownership percentage shrinks with each funding round until you own approximately as much of your company as you own of the Pacific Ocean. It's like splitting a pizza with more and more people, except you baked the pizza and now you get one olive.

🚀 Startup / VC

Intermediate

Series C

The attempt to prove you weren't just lucky with Series A and that your unit economics actually work at scale.

🚀 Startup / VC

Beginner

angel

A wealthy individual who invests their own money in early-stage startups, typically because they're either bored with normal investments or enjoy the thrill of watching their cash evaporate in creative ways. These financial guardian spirits usually write checks between $25K and $100K in exchange for equity, mentorship duties they may or may not fulfill, and the right to say 'I invested in that' at cocktail parties. They're called angels because founders pray for them, not because they're particularly heavenly.

🚀 Startup / VC

Intermediate

valuing

The process of slapping a number on something that probably doesn't have a real value. In venture capital, it's educated guessing dressed up as financial analysis—your startup is worth $100M because we feel like it is, and also because everyone else paid way too much for similar companies.

🚀 Startup / VC

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