Glossary

Short definitions of fundraising, accelerator, and grant terms. Link straight to any one of them.

5

501(c)(3) and fiscal sponsorship

A 501(c)(3) is a U.S. tax-exempt non-profit; a fiscal sponsor is an existing 501(c)(3) that lets a project receive tax-deductible donations and grants under its umbrella before the project incorporates on its own.

A

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Accelerator

An accelerator is a fixed-term, cohort-based program that invests a small amount in early-stage startups in exchange for equity, then runs intensive mentorship that ends with a demo day.

B

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Burn Rate

Burn rate is how much cash your company spends each month. Gross burn is total expenses; net burn subtracts revenue.

C

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Cap Table

A cap table (capitalization table) is the spreadsheet that tracks who owns what in your company: founders, employees, investors, and option holders.

D

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Demo day

Demo day is the public showcase at the end of an accelerator program, where each cohort company pitches investors over a compressed window. Usually a single afternoon of three-to-five-minute presentations.

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Dilution

Dilution is the drop in your ownership percentage when a company issues new shares. It happens at every priced round and option pool top-up.

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Discount (SAFE / convertible)

A discount on a SAFE or convertible note is a percentage off the price-per-share at the next priced round, rewarding the early investor for putting cash in before the round was priced.

G

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Grant

A grant is non-repayable funding awarded by a government agency, foundation, or corporation in exchange for delivering on a specific scope of work. No equity given up, but heavy reporting and compliance attached.

I

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Incubator

An incubator is an open-ended program that provides workspace, advisors, and shared services to early-stage companies. Usually no equity and no fixed graduation date.

L

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Liquidation preference

Liquidation preference is the contractual right of preferred shareholders to be paid before common shareholders when the company is sold, liquidated, or otherwise has cash to distribute.

N

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Non-Dilutive Funding

Non-dilutive funding is capital you receive without giving up equity. Grants, cloud credits, revenue-based financing, and competition prizes all qualify.

O

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Option Pool

An option pool is a chunk of company shares set aside for current and future employees, usually 10–20% of the company.

P

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Post-money valuation

Post-money valuation is the value of a company immediately after it receives a round of investment. Pre-money valuation plus the new money in.

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Pre-Money Valuation

The pre-money valuation is what your company is worth immediately before an investment round closes. Add the new investment to get the post-money valuation.

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Pro-rata rights

Pro-rata rights give an existing investor the right (but not the obligation) to participate in future financing rounds at a level that maintains their current ownership percentage.

R

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Runway

Runway is the number of months your business can operate before running out of cash, calculated as cash on hand divided by monthly burn rate.

S

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SAFE

A SAFE (Simple Agreement for Future Equity) lets an investor convert cash into equity at a future priced round, without setting a valuation today.

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SBIR / STTR

SBIR and STTR are U.S. federal R&D grant programs that fund early-stage commercialization of technology in small businesses. Non-dilutive, milestone-based, run across 11 federal agencies.

V

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Valuation cap

A valuation cap is the maximum company valuation at which a SAFE or convertible note will convert into equity, regardless of the actual price of the future round.

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Vesting cliff

A vesting cliff is the minimum period an employee or founder must stay at a company before any of their equity grant becomes vested. Usually one year, after which the cliff portion vests at once.