Startup Fundraising Wiki

Startup funding converts a milestone-sized cash gap into a financing choice with specific repayment, dilution, control, and legal consequences.

Bootstrapping and venture capital are different systems for financing risk: one protects ownership by constraining spend, the other trades ownership and governance rights for speed, capacity, and a larger required outcome.

Pre-seed, seed, and Series A are market labels for different risk-reduction jobs—not fixed revenue, valuation, or check-size thresholds.

A startup valuation is a purpose-specific estimate or negotiated price; founders should triangulate market evidence, operating scenarios, financing ownership, and security rights instead of treating one formula as truth.

A SAFE gives an investor a contractual right to future equity when a defined event occurs; the cap, discount, capitalization definition, and later financing terms decide the shares issued.

A convertible note is startup debt that usually converts into equity at a later financing; principal, accrued interest, the cap or discount, and the capitalization definition determine the shares issued — and the conversion price determines a liquidation preference nobody negotiated.

A cap table records who owns which securities; a dilution model shows how financing, options, convertibles, and other issuances change each holder's percentage and economic outcome.

A liquidation preference determines who gets paid first in a startup exit; its multiple, participation, seniority, dividends, and conversion terms can matter more than ownership percentages at modest outcomes.

A venture term sheet summarizes the proposed financing's economics, governance, and process; the headline valuation matters only in combination with dilution, preference, control, and closing conditions.

A funding round is oversubscribed when qualified investor demand exceeds a defined amount the company is prepared and authorized to accept; the useful work is proving the demand, naming the denominator, and allocating scarce capacity deliberately.