Speaking the wrong language in a pitch signals inexperience. This glossary covers every term investors use — from funding mechanics to growth metrics to deck structure terms — with plain-English definitions and context for your fundraise.
An early funding round where individual investors — angels — invest personal capital, typically $25K to $500K total, before institutional VC involvement.
In your pitch deck
Angel investors often move faster than VCs and accept higher risk in exchange for larger equity stakes at lower valuations.
A short-term financing round between larger rounds, usually structured as a convertible note, designed to extend runway while the company prepares for the next priced round.
In your pitch deck
Bridge rounds signal that the company needs more time to hit the metrics required for the next stage. Present them confidently with a clear milestone plan.
A form of debt that converts to equity at a future priced round, typically with a discount rate and a valuation cap that protect early investors.
In your pitch deck
Convertible notes delay the valuation negotiation — useful at very early stages when valuation is hard to justify.
A contract that gives investors the right to receive equity in a future priced round, without interest or a maturity date. Created by Y Combinator.
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SAFEs are the dominant instrument at pre-seed and early seed in 2026. Post-money SAFEs include the investment in the dilution calculation; founders should understand the difference.
The valuation of a company before new investment is added. If a company raises $2M at a $8M pre-money valuation, the post-money valuation is $10M.
In your pitch deck
Investors negotiate pre-money valuation. Founders often anchor high; investors anchor to comparable companies at the same stage and traction level.
The company's valuation after new investment is added. Post-money = pre-money valuation plus the new investment amount.
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Post-money SAFEs calculate dilution based on post-money valuation, which means earlier investors see less dilution from bridge rounds.
A spreadsheet that lists all owners of a company's equity, including founders, employees with options, and investors — showing each party's ownership percentage and share class.
In your pitch deck
Investors review the cap table during diligence. A messy cap table with too many small angels or complex structures slows deals.
The reduction in existing shareholders' ownership percentage that occurs when new shares are issued to new investors.
In your pitch deck
Founders typically accept 15 to 25 percent dilution per institutional round. Understanding dilution helps you negotiate valuation and option pool sizing.
The right of an existing investor to participate in future funding rounds to maintain their ownership percentage.
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Pro-rata rights are highly negotiated. Top investors ask for them as a signal of expected returns; they matter most in hot companies.
A contractual protection for investors that adjusts their ownership if the company later raises money at a lower valuation (a down round).
In your pitch deck
Broad-based weighted average anti-dilution is founder-friendly. Full ratchet anti-dilution is heavily investor-friendly and rarely acceptable in modern term sheets.
A funding round where the company raises capital at a lower valuation than the previous round.
In your pitch deck
Down rounds trigger anti-dilution protections and damage team morale. They are survivable but require transparent communication with all stakeholders.
A provision allowing majority shareholders to force minority shareholders to agree to a sale of the company.
In your pitch deck
Standard in VC term sheets. Designed to prevent a small minority from blocking an acquisition that the majority supports.
The total value of transactions processed through a marketplace platform, before the platform's take rate is subtracted.
In your pitch deck
GMV is a vanity metric without context. Investors want to see GMV alongside take rate, net revenue, and retention to understand the real business.
Revenue minus the direct cost of delivering that revenue (COGS), expressed as a percentage. SaaS businesses typically run 70 to 85 percent gross margin.
In your pitch deck
Gross margin is a proxy for business quality. High gross margin businesses can reinvest more in growth; low gross margin businesses burn more cash to scale.
A growth curve that shows flat early growth followed by a sudden steep increase — shaped like a hockey stick. Often used to describe idealized projections.
In your pitch deck
Investors are deeply skeptical of hockey stick projections without a specific, credible catalyst that explains when and why the inflection happens.
A pattern where a metric initially declines before recovering and growing above the starting point — common in early SaaS cohort retention.
In your pitch deck
J-curves in retention suggest initial churn followed by stabilization among engaged users. Present them honestly with the cohort data to back the story.
The total revenue a company expects to earn from a single customer over the entire relationship. Calculated as ACV divided by churn rate, or gross margin times average customer lifetime.
In your pitch deck
Always use gross margin LTV, not revenue LTV. Investors who see revenue LTV without the margin context will adjust it themselves — and the ratio will look worse.
The ratio of customer lifetime value to customer acquisition cost. A ratio of 3:1 or higher is generally considered healthy for SaaS businesses.
In your pitch deck
The LTV:CAC ratio tells investors how efficient your growth is. Present it with payback period alongside it for a complete picture of acquisition economics.
A SaaS efficiency metric: net new ARR divided by the prior quarter's sales and marketing spend. A magic number above 0.75 indicates efficient growth.
In your pitch deck
Series A investors often benchmark magic number against stage peers. If yours is low, explain why — it may be due to long sales cycles that will normalize.
The predictable, normalized monthly revenue from subscription customers. Exclude one-time payments, set-up fees, and professional services from MRR.
In your pitch deck
MRR growth rate matters as much as the absolute number at early stages. Investors want to see month-over-month percentage growth, not just the MRR line.
MRR multiplied by 12, representing the annualized value of recurring subscription revenue.
In your pitch deck
ARR is the standard metric for Series A conversations in SaaS. It is a run-rate number, not trailing twelve months revenue.
The percentage of revenue retained from existing customers over a period, including expansion revenue and subtracting churn and contraction.
In your pitch deck
NRR above 100 percent means existing customers pay more over time without adding new customers. This is the single most important SaaS metric at Series A.
The rate at which a company spends its cash reserves. Net burn is cash out minus cash in per month.
In your pitch deck
Always present burn rate with runway. An investor who sees a $200K monthly burn wants to know how many months of runway that represents and what milestone the runway is designed to reach.
A structural competitive advantage that makes it difficult for competitors to replicate a company's business. Types include data moats, network effects, regulatory licenses, and distribution lock-in.
In your pitch deck
Investors are trained to test moat claims. Saying 'we have a moat' without evidence is a red flag. Show the mechanism by which your advantage compounds over time.
The total cost to acquire one new customer, including all sales and marketing expenses divided by the number of new customers acquired in the same period.
In your pitch deck
Use fully loaded CAC — include sales salaries, marketing tools, and overhead. Founders who use only ad spend systematically underestimate their true CAC.
The time required to recover the cost of acquiring a customer from the gross profit generated by that customer. Calculated as CAC divided by (ACV times gross margin).
In your pitch deck
Under 12 months is excellent. Under 18 months is strong. Over 24 months is a concern that requires a strong LTV argument to justify.
The degree to which a product satisfies strong market demand. Informally defined as the feeling that the product is 'pulling itself' rather than being pushed on customers.
In your pitch deck
Marc Andreessen's original definition: 'Product-market fit means being in a good market with a product that can satisfy that market.' Sean Ellis test: 40%+ of users would be 'very disappointed' if the product went away.
A go-to-market strategy where the product itself drives user acquisition, expansion, and retention — without requiring a direct sales motion.
In your pitch deck
PLG businesses often show lower initial CAC but require careful product design to convert free users to paid. Investors want to see PLG conversion rates and expansion behavior.
The single metric that best captures the core value a product delivers to customers and predicts long-term growth.
In your pitch deck
Slack's North Star is daily active users. Airbnb's was nights booked. Your North Star should be the metric that, if it grows, everything else grows with it.
A SaaS health benchmark: revenue growth rate percentage plus profit margin percentage should equal at least 40. Balances growth and profitability.
In your pitch deck
The Rule of 40 becomes relevant at Series B and beyond. Early-stage founders should know the concept but focus on growth rate over profitability.
An extrapolation of current revenue performance to an annual figure. If a company earns $150K in one month, its revenue run rate is $1.8M.
In your pitch deck
Run rate is not the same as ARR. Use ARR for recurring revenue businesses; use run rate for transactional businesses where monthly revenue is not fully predictable.
A detailed description of the company type or person who would get the most value from your product and is most likely to buy, retain, and expand.
In your pitch deck
A strong ICP defines firmographics (company size, industry, location), technographics (tech stack, tools used), and behavioral triggers (what causes them to buy now).
The total market demand for a product or service if there were no competition and the company had 100 percent market share.
In your pitch deck
TAM alone impresses no one. Investors want to see the progression: TAM shows the ceiling, SAM shows the reachable opportunity, SOM shows your 3-year target.
The portion of TAM that your product can actually serve given your current business model, geography, and target customer profile.
In your pitch deck
SAM is your more credible market number. Build it bottom-up: number of target companies times average contract value, not a percentage of TAM.
The realistic portion of SAM that you can capture over 3 to 5 years given your resources, go-to-market, and competitive position.
In your pitch deck
SOM is what investors use to sanity-check your financial projections. Your 3-year revenue target should be a defensible percentage of SOM.
A non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, governance rights, and investor protections.
In your pitch deck
Get a lawyer before signing a term sheet. While non-binding on investment, some provisions — like exclusivity — are legally enforceable.
The investor who leads a funding round, typically contributing the largest check, negotiating the term sheet, and often taking a board seat.
In your pitch deck
Most rounds need a credible lead before others will commit. Finding your lead investor is usually the hardest part of a fundraise.
A group of investors who pool capital to co-invest in a deal, often led by an experienced angel or VC who sources the deal.
In your pitch deck
Syndicates on platforms like AngelList allow founders to raise from many smaller investors with one lead negotiating the terms.
A legal entity created specifically to hold an investment in one company, allowing multiple investors to be represented as a single cap table line item.
In your pitch deck
SPVs are useful for founders who want to take angel investment without cluttering the cap table — each SPV appears as one investor rather than ten.
A privately-held startup valued at $1 billion or more.
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There are over 1,000 unicorns globally as of 2026. Using 'unicorn potential' in a pitch rarely lands — investors respond better to specific market sizing and financial logic.
The timeline over which founders and employees earn their equity. The standard schedule is four years with a one-year cliff.
In your pitch deck
Investors require founder vesting to prevent early exits that leave them holding equity with no operational founders. Present your vesting schedule clearly in the cap table or appendix.
A one-page document (or the first slide of a deck sent cold) that captures the company, problem, solution, traction, team, and ask — readable in under 90 seconds.
In your pitch deck
At Series A, investors often read the executive summary before agreeing to a meeting. Format it for cold reading: no context assumed, no jargon unexplained.
A single-page document summarizing the company for investors who are not yet ready to engage with a full deck. Often shared at conferences or through warm introductions.
In your pitch deck
A strong one-pager answers: what does the company do, what problem does it solve, what is the traction, who is the team, and how much are you raising.
The slide that states the funding amount being raised, how the funds will be used, and the milestones the raise is expected to unlock.
In your pitch deck
The ask slide should answer three questions: how much, how it will be spent (by category), and what proof points it will buy before the next raise.
The slide or section of a deck that explains the specific market timing — regulatory change, technology unlock, behavioral shift, or infrastructure availability — that makes this the right moment to build this company.
In your pitch deck
Many founders skip the Why Now slide or treat it as optional. Investors consider it one of the most important slides because it explains why the market is ready for your solution today.
The story structure of the entire pitch deck — typically: problem, solution, market opportunity, traction, team, financials, ask — arranged to build conviction progressively.
In your pitch deck
A strong narrative arc means each slide answers a question raised by the previous one. Investors should feel pulled through the deck, not pushed.
Additional slides at the end of the deck that contain supporting data, technical detail, customer case studies, or answers to anticipated investor questions.
In your pitch deck
A well-organized appendix signals preparation. Include: financial model detail, cohort data, technical architecture, customer logos, and team bios with full backgrounds.
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