no-shop clause

Definition

A provision preventing startups from soliciting other offers while negotiating terms, ensuring you can't play investors against each other. The dating equivalent of 'we're exclusive now' after one coffee.

Example Usage

We signed a no-shop clause for 30 days, which became 60 days of 'just a few more questions' before they finally wired the money.

Origin

M&A terminology from the 1980s, adapted to venture financing in the 1990s

Fun Fact

No-shop periods are supposed to be 30-45 days but often extend indefinitely as investors conduct endless diligence, trapping desperate founders.

Source: M&A and venture capital term sheet provisions

Related Terms

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vesting acceleration

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post-money valuation

Company valuation after investment capital is added, the number founders brag about while carefully omitting the 'post-money' qualifier. What your company is theoretically worth with someone else's money included.

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Decacorn

A startup valued at over ten billion dollars, because apparently unicorn wasn't exclusive enough and Silicon Valley needed a word that makes mythological creatures sound like a tiered loyalty program. Next up: hectocorn, at which point we're just making up zoo animals.

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participation rights

A clause letting preferred investors double-dip by getting their liquidation preference back AND participating in the remaining proceeds with common shareholders. It's having your cake, eating it too, and taking a slice of everyone else's.

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unit economics

The revenue and costs associated with a single customer or transaction, supposedly proving your business model works before you scale. Often the awkward math that reveals you lose money on every sale but plan to make it up in volume.

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vested

The magical moment when stock options or retirement contributions officially become yours to keep, transforming from corporate dangling carrot into actual ownership. It's the golden handcuffs' lock clicking shut, ensuring you'll think twice before rage-quitting. The startup world's version of 'you must be this loyal to ride this rocket ship.'

🚀 Startup / VC

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