Startup Law Glossary

This startup law glossary isn’t meant to be memorized. It’s here for real moments—when you’re in a fundraising conversation, a board meeting, or a negotiation and want to sanity‑check what you’re hearing.

Some of these terms show up directly in documents. A lot of them don’t. But all of them come up in practice—on diligence calls, in investor feedback, and in the off‑hand comments that end up shaping real decisions. Use this startup law glossary to get clear on language, incentives, and what people usually mean (or don’t mean) when they use these terms.

Most importantly, don’t treat these definitions as rules. Context matters. Leverage matters. Timing matters. This startup law glossary is meant to help you understand how startup deals actually work in the real world—not just how they’re supposed to work on paper.

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1X

25102(f)

25102(o)

280G

409A

409A Report

4 Years with a One Year Cliff

83b Election

-A-

Accelerated Vesting

Acceleration Clause

Accelerator

Accredited Investor

Acqui-hire

Acquisition

Administrator

Advisory Board

Alternative Minimum Tax (AMT)

Amended and Restated Certificate of Incorporation

Amortization

Analyst

Angel Financing

Angel Group

Angel Investor

Annual Meeting

Anti-Dilution

Arbitrage

Articles of Incorporation

As-Converted Basis

Asset Acquisition

Assignment

Associate

At-Will Employee

Authorized Shares

Automatic Conversion

-B-

Back-Up Certificate

Balance Sheet

Bankruptcy

Basis Point

Basket

Benchmark

Best Efforts Offering

Black-Scholes Option Pricing Model

Blanket Lien

Blended Preferences

Blue Sky Law

Board Consent

Board Observer

Board of Directors

Boilerplate

Bond

Book Value

Bootstrapping

Break-up Fee

Bridge Financing

Broad-based Weighted Average

Broker-Dealer

Burn Rate

Business Plan

Buy-Sell Agreement

Buyer Optionality

Bylaws

-C-

Call Right

Capital Account

Capital Call

Capital Commitment

Capital Gains

Capital Gains Tax

Capital Interest

Capitalization Table

Capital Stock

Cap Table Overhang

Carried Interest (Carry)

Carveout

C Corporation

Certificate of Incorporation

Certificate of Incumbency

CFIUS

Change of Control

Chapter 7

Chapter 11

Charter

Chief Executive Officer (CEO)

Class F Common Stock

Clawback

Clean Cap Table

Cliff

Closing

Collateral

Commercially Reasonable Efforts

Common Stock

Conditions Precedent

Conditions Subsequent

Confidential Information

Consideration

Contingent Liability

Control

Control Anxiety

Control Rights

Control Terms

Conversion Discount

Conversion Price Adjustment

Conversion Rights

Convertible Debt

Convertible Equity

Convertible Note

Convertible Security

Convertible Stock

Corporate Governance

Corporate Resolution

Corporate VC

Co-Sale

Covenants

Cram Down Round

Creditor

Cross-Default

Cross-Fund Investment

Crowdfunding

Cumulative Dividend

Cumulative Voting

Customary

 

-D-

Data Room

Date of Issue

Deal Certainty

Deal Fatigue

Deal Flow

Deal Momentum

Debenture

Debt Financing

Debt-to-Equity Ratio

Deck

Default

Delaware General Corporation Law

Demand Registration Rights

Depreciation

Director

Directors’ and Officers’ (D&O) Insurance

Disclosure

Disclosure Documents

Distressed Debt

Distribution

Dividends

Dodd-Frank

Domestic Corporation

Double Trigger Acceleration

Down Round

Drag Along Rights

Drawdown

Drive-By VC

Dry Powder

Due Diligence

Duty of Care

Duty of Loyalty

 

-E-

Early-Stage Financing

Earnout

EBITDA

Economic Terms

Economics vs. Control

Economies of Scale

Effective Pre-Money

EIN

Elevator Pitch

Employee Stock Option Plan

Employment Agreement

Engagement Letter

Entrepreneur in Residence (EIR)

Equity

Equity Financing

ERISA

Escrow

Evergreen Fund

Exercise

Exercise Price

Exit Event

Exit Strategy

-F-

Face Value

Fair Market Value

Fairness Opinion

Family Office

Federal Funds Rate

Federal Reserve Act

Fiduciary Duties

Financial Accounting Standards Board

Financing Out Clause

Financing Window

Finder

Finder’s Fee

FINRA

First Time Fund

Flat Round

Float

Floatation

Follow-on Financing

Follow‑On Strategy

Foreign Corrupt Practices Act

Foreign Qualification

Form 8-K

Form 10-K

Form 2553

Form S-1

Form S-2

Form S-3

Form S-4

Forward Stock Split

Founder

Founder Fatigue

Founder‑Friendly

Founder Misalignment

Founder Overhang

Founder’s Stock

Franchise Tax

Free Cash Flow

Freedom To Operate Opinion

Freeze Out

Friends and Family Round

Full Ratchet

Fully-Diluted Basis

Fund

Fund Economics

Fund of Funds

Funds Flow Memo

-G-

GAAP

Game Theory

GDPR

General Partner

General Solicitation

Going Private

Golden Parachute

Go-Shop

Grossing Up

Growth Stage

 

-H-

Haircut

Hedge Fund

High Resolution Financing

Hockey Stick

Holdback

Holdback Escrow

Holding Company

Holding Period

Hostile Takeover

Hurdle Rate

 

-I-

Illiquid

Incentive Misalignment

Incentive Stock Option (ISO)

Incorporation

Incubator

Indemnification

Indemnification Cap

Indemnity

Independent Contractor

Independent Director

Information Rights

Initial Coin Offering (ICO)

Initial Public Offering (IPO)

In-Kind Distribution

Inside Round

Insolvency

Institutional Investor

Integration

Integration Risk

Intellectual Property

Intercreditor Agreement

Interest

Internal Rate of Return (IRR)

Inventions Assignment

Investment Adviser

Investment Banker

Investment Company Act of 1940

Investor‑Friendly

Investor Rights Agreement

Issued Shares

Issue Price

Issuer

 

-J-

J Curve

JOBS Act

Joinder Page

Joint Venture

Junior Debt

Junk Bond

 

-K-

Key Employee

Key Person Clause

Key Person Insurance

KISS

 

-L-

Lapsed Option

Last In, First Out (LIFO)

Later Stage Financing

Lead Investor

Legal Opinion

Letter of Intent

Leverage (Ability)

Leverage (Debt)

Leveraged Buyout (LBO)

License

Lifestyle Company

Lifting A Leg

Light Preferred

Limited Liability Company (LLC)

Limited Liability Partnership (LLP)

Limited Partners

Limited Partnership

Liquidation

Liquidation Event

Liquidation Preference

Liquidity Event

Lock-up Period

 

-M-

Major Investor

Majority Shareholder

Management Buyout

Management Carveout Plan

Management Fee

Management Rights

Mandatory Redemption

Marked to Market

Market (as used by VCs)

Market Standard

Market Terms

Material Adverse Change Clause

Materiality Qualifier

Materiality Scrape

Mentors

Merger

Mergers and Acquisitions (M&A)

Mezzanine Financing

Mezzanine Level

Micro VC

Milestones

Most Favored Nation Clause

 

-N-

Narrow-Based Weighted Average

National Venture Capital Association

NDA

Negative Control

Negotiation Leverage

Newco

No-Action Letter

No-Par Value Stock

No-Shop Clause

Non-Accredited Investor

Non-Compete

Non-Cumulative Dividends

Non-Participating

Non-Qualified Stock Option (NSO)

Non-Solicitation

Non-Voting Stock

NVCA Docs

 

-O-

Offering Documents

Officer

Operating Agreement

Operating Expenses

Optics

Option Pool

Option Pool Overhang

Ordinary Income Tax

Outstanding Shares

Overhang

Oversubscription

Oversubscription Privilege

 

-P-

Paid-In Capital

Par Value

Parachute Payment

Pari Passu

Participating Preferred Stock

Participation Rights

Partnership

Pass Through Entity

Patent

Pay to Play

Payment in Kind (PIK)

Penny Warrant

Perpetual Warrant

Personal Guaranty

Piggy-Back Rights

Placement Agent

Poison Pill

Portfolio Company

Portfolio Construction

Post-Money Valuation

Pre-Money Shares

Pre-Money Valuation

Preemptive Rights

Preferred Return

Preferred Stock

Prepayment

Price Cap

Price Per Share

Privacy Policy

Private Company

Private Equity

Private Investment in Public Equities

Private Offering

Private Placement

Private Placement Memorandum

Process Risk

Pro Forma

Pro Rata

Profits Interest

Promissory Note

Promote

Proprietary Rights

Prospectus

Protective Provisions

Proxy Voting

Public Benefit Corporation

Public Benefit LLC

Public Company

Public Offering

Pump and Dump

Purchase Agreement

Put Right

 

-Q-

Qualified Financing

Qualified Small Business Stock (QSBS)

Quasi-Public Corporation

Quiet Period

Quorum

 

-R-

Ratchet

Reasonable (Deal Context)

Recapitalization

Redemption Right

Redline

Registered Agent

Registered Offering

Registrable Securities

Registration

Registration Rights

Regulation A

Regulation A+

Regulation Crowdfunding

Regulation D

Regulation S

Reincorporation Merger

Representations and Warranties

Repurchase Option

Reserved Shares

Reserves

Residuals Clause

Restricted Stock

Restricted Stock Purchase Agreement

Restriction on Sales

Return on Investment

Reverse Break Up Fee

Reverse Dilution

Reverse Engineer

Reverse Stock Split

Reverse Vesting

Revlon Duties

Right of First Offer

Right of First Refusal

Right of First Refusal and Co-Sale Agreement

Right of Rescission

Rights Offering

Risk Tolerance

Road Show

Rolling Close

Rollup

Round

Royalties

Rule 144

Rule 145

Rule 501

Rule 502

Rule 503

Rule 504

Rule 505

Rule 506

Rule 701

Runway

Runway vs. Leverage

 

-S-

S-Corporation

SAFE

Safe Harbor

SAFT

Sarbanes-Oxley Act of 2002

Scalability

Scale Up

Search Fund

Second Bite of the Apple

Secondary Buy-Out

Secondary Market

Secondary Sale

Secured Debt

Securities Act of 1933

Securities and Exchange Commission (SEC)

Securities Exchange Act of 1934

Security

Security Interest

Seed Capital

Seed Preferred

Seed Stage

Senior Debt

Senior Securities

Series A Preferred Stock

Series A Round

Series AA Round

Series B Round

Series FF Stock

Series Pre-Seed

Series Seed Financing

Shareholders’ Agreement

Shell Corporation

Side Letters

Signaling Risk

Single Trigger Acceleration

Sliding Fee Scale

Small Business Administration

Small Business Innovation Research Program

Small Business Investment Company

Soft Control vs. Hard Control

Sole Proprietor

Special Purpose Acquisition Company

Special Purpose Vehicle

Spinoff

Stacked Preference

Staggered Board

Stalking Horse

Startup

Startup Lawyer

Stock Options

Stock Plan

Stock Purchase Agreement

Stock Split

Stockholders

Stockholders’ Consent

Strategic Investment

Strike Price

Subordinated Debt

Subscription Agreement

Subsidiary

Super Angel

Super Pro Rata Rights

Supermajority Voting

Sweat Equity

Syndication

 

-T-

Tag Along Rights

Takedown

Takeover

Tax-Free Reorganization

Taxable Event

Technology Transfer Agreement

Ten Bagger

Tender Offer

Term Sheet

Terms of Service

Time Value of Money

Timing Risk

Tokens

Trade Secret

Tranche

 

-U-

UCC

UCC Financing Statement

Underwater

Underwriter

Unrelated Business Taxable Income

Unsecured Debt

Utility Token

 

-V-

Valuation

VC Fund

Venture Capital

Venture Capital Financing

Venture Capitalist (VC)

Venture Capital Limited Partnership

Venture Debt

Venture-Backed Startup

Vested

Vesting

Vesting Schedule

Vintage Year

Voluntary Redemption

Voting Agreement

Voting Rights

 

-W-

Warrant

Washout Round

Weighted Average Anti-Dilution

White Knight

White Label

Working Capital Adjustment

Workout Agreement

 

-Z-

Zombie Equity

Zone of Insolvency