Startup investment glossary: from term sheet to cap table
Pre-money, dilution, ESOP, vesting, liquidation preference, runway and more: plain-language definitions of the terms used in investor meetings.
By Editorial Team
We explain the terms that come up most when talking to investors, in plain language. Bookmark this glossary; it will help when reading a term sheet or preparing for an investor meeting.
Pre-seed / Seed
Pre-seed is the earliest investment stage, when the product and team take shape. Seed is the first institutional round, raised to prove product–market fit and drive initial growth.
Series A
The round raised by startups that have found product–market fit and proven growth, in order to scale.
Angel investor
An individual who invests their own money in early-stage startups. In Türkiye, licensed angels fall under the individual participation capital (BKS) regulation.
Venture capital (VC)
Professional investment firms that invest funds raised from investors into high-growth startups.
Corporate venture capital (CVC)
Investment units of large companies that back startups for strategic reasons.
Pre-money valuation
The value placed on the company before the new investment.
Post-money valuation
Pre-money valuation plus the new investment. The investor's stake equals the investment divided by the post-money valuation.
Dilution
The decrease in existing shareholders' ownership percentage when new shares are issued.
Cap table
A table showing who owns how much of the company, including options and convertible instruments.
Term sheet
A summary of the key investment terms, largely non-binding.
Due diligence
The investor's review of the company's legal, financial, technical and commercial position before investing.
Option pool (ESOP)
Equity set aside to grant shares or options to employees.
Vesting
Earning shares or options gradually over time, usually with a one-year cliff.
Liquidation preference
The investor's right to receive their investment (or a multiple) before other shareholders when the company is sold or wound up.
Convertible instruments
Agreements under which an investment converts into shares later, usually at the valuation of the next round.
Burn rate and runway
Burn rate is the company's net monthly cash spend; runway is how many months current cash lasts at that rate.
MRR / ARR
Monthly and annual recurring revenue, the core size metric for subscription businesses.
CAC and LTV
CAC is the average cost of acquiring a customer; LTV is the gross profit a customer generates over their lifetime. In a healthy business LTV is well above CAC.
Exit
When investors realise a return by selling their shares, usually through an acquisition or IPO.
Next step
Once you know the terms, read our seed round guide to go through the process step by step, and create your startup profile on Türkiye Startups to start meeting investors.
This guide is for general information only and is not legal, financial or investment advice. Check official sources and consult professionals for current terms.
