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Glossary Terms

Drag-Along Rights

Rights allowing majority shareholders to force minority shareholders to agree to the sale of the company.

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CAC (Customer Acquisition Cost)

The cost of acquiring a new customer, used to assess scalability and marketing efficiency.

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Cap Table (Capitalization Table)

A table that shows the ownership stakes, equity dilution, and value of equity in a company.

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Board Composition

The structure of a company's board of directors, including founders, investor representatives, and independent members, often formalized during Series A.

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Anti-Dilution Rights

Provisions protecting investors from equity dilution in future funding rounds, often by adjusting share price.

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Dilution

The reduction in ownership percentage for existing shareholders when new shares are issued in a funding round.

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Convertible Note

A short-term loan that converts into equity at a later funding round, often used before Series A.

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Burn Rate

The rate at which a company spends its cash reserves, critical for determining how long funding will last.

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ARR (Annual Recurring Revenue)

The annualized revenue from subscription-based services, used as a key growth metric in funding rounds.

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