5 exercises — understand the venture-capital vocabulary founders encounter when raising money.
Investor idioms in this set
term sheet — a non-binding outline of an investment's key terms
unicorn — a private startup valued at over $1 billion
dry powder — capital an investor has available but not yet deployed
pro rata rights — the right to invest more to keep your ownership percentage
acqui-hire — an acquisition made mainly to obtain the team
0 / 5 completed
1 / 5
A VC sends a founder a "term sheet". What is it?
A term sheet is a (mostly) non-binding summary of the headline terms of a proposed investment: the amount, valuation, type of security, board seats, and key investor rights. It signals serious intent and sets the framework that lawyers then turn into binding agreements. Founders learn to read term sheets carefully — terms like liquidation preferences and anti-dilution can matter as much as the valuation. Receiving one is a major milestone in a fundraise.
2 / 5
A startup is described as a "unicorn". What does this mean?
A unicorn is a privately held startup valued at over $1 billion. The term, coined by investor Aileen Lee in 2013, originally reflected how rare such companies were (like the mythical creature). They have since become more common, spawning related terms like "decacorn" ($10B+). The label is a status symbol, though critics note paper valuations can be inflated and do not always survive a public listing or down round.
3 / 5
An investor mentions they have plenty of "dry powder". What does this mean?
Dry powder refers to capital an investor or fund has raised and committed but not yet invested — money ready to deploy. The phrase comes from the era of gunpowder, which had to be kept dry to be usable. A VC with lots of dry powder can move quickly on opportunities and support existing portfolio companies through follow-on rounds. In downturns, "plenty of dry powder" signals an investor is well-positioned to invest while others pull back.
4 / 5
An early investor exercises their "pro rata rights". What does this allow them to do?
Pro rata rights give an existing investor the option (not obligation) to invest in future rounds enough to maintain their percentage ownership, rather than being diluted as new investors come in. "Pro rata" is Latin for "in proportion." These rights matter to investors who want to keep their stake in winners; for founders, granting them affects how much room is left for new investors in later rounds. They are a standard, negotiated term.
5 / 5
A big company makes an "acqui-hire". What does this mean?
An acqui-hire (acquisition + hire) is when a company buys a startup mainly to obtain its team — the engineering or design talent — rather than its product, revenue, or users, which are often wound down. It is a common soft-landing for startups that built a great team but did not find traction: founders and staff get jobs (and sometimes retention packages) while investors may recoup some capital. The product itself is frequently shut down post-acquisition.