The fundraising glossary

A fund's stage is a promise to its own investors, written when the fund was raised. A Series A partner who loves your pre-seed company still cannot write the cheque, because a $300K cheque into an unproven team fits no line of the agreement that capitalised the fund. "We focus on Series A" reads as a preference and works like a contract. Find the earliest-stage cheque the firm has written in the last eighteen months.

The worldview a fund invests behind, decided before you walked in and usually written nowhere. A good company outside the thesis loses to a mediocre company inside it, every time. The tell is a warm meeting followed by a pass with no reason attached, which founders file as a maybe and should file as a no. Read the last ten investments and ask what belief connects them.

Every fund has a smallest cheque it will write and almost none publish it. A $400M fund aiming at 25 companies needs an average cheque above $10M, so a $600K round is not small for them, it is impossible. Thesis fit can be argued. Cheque size cannot.

Three different filters wear the same name. Two are structural: legal eligibility, and a mandate the fund promised its own investors. The third is network reach, meaning the partner backs companies they can get to and get references on. That third one shows up as speed, a sharp no or silence within minutes, and it is not a judgement about your business.

The kind of company a fund is built around. Some back category creators that redefine how an industry works. Others back share-takers that win a defined market by executing better. Both are good businesses. A fast follower pitching a category-creator fund loses on architecture, and no amount of meeting skill moves it. CherryPitch does not measure this. You read it out of a portfolio.

Where a fund sits in its own life. A fund deploys over roughly three to four years, then holds the rest back for companies it already owns. A partner in month forty-two of a four-year cycle can take your call and cannot write your cheque, usually because of dry powder rather than fit, and the meeting will feel identical to one that could close.

The split between funds backing infrastructure, the layer other companies build on, and funds backing applications, the thing an end user opens. Both will call themselves fintech, or health, or climate. Industry tells you who will take the meeting. Problem type tells you who can write the check. Read the last ten checks and ask whether most of them are things other companies build on or things an end user opens.

The founder profile a fund has decided to back before your numbers get a vote. Some firms only write to repeat founders, technical founders who shipped production code, or operators with a decade inside the industry. The meeting stays warm and the pass still happens on the team slide, with feedback that points everywhere except the real reason. Read who founded the fund's last fifteen companies, not what they built.

The institutions and individuals whose money a fund invests. Everything a fund will and will not do was agreed with them before the first cheque, which is why a partner's enthusiasm cannot override the fund's shape.

The people who run the fund and decide what it backs. A GP can champion you inside the firm. A principal or an associate usually cannot, which matters when you are working out whether a warm conversation is going anywhere.

Total capital raised. It determines how many companies the fund will back, how big each cheque must be, and therefore what valuation it can accept. A $40M fund and a $400M fund behave like different industries.

The year a fund closed and started investing. One that closed eighteen months ago and talks about new deals in the present tense behaves very differently from one that closed close to four years ago.

The period, usually three to four years, when a fund makes new investments. After it, most remaining capital is reserved for the portfolio.

Capital held back to invest again in companies the fund already owns, often close to half the fund. It is why a fund with money in the bank can still be closed to new companies.

The money a fund still has for new investments, as distinct from capital already committed or reserved. A fund three years into a four-year window can have less available for a new company than a much smaller fund that closed last quarter. This is the number that decides whether an investor can act on you, and it is the one you will never be shown. CherryPitch does not track it, because no reliable public record of it exists. Ask two things in the meeting: when did you close this fund, and how many new positions are you still making this year.

The share of a company a fund aims to hold at entry, usually 10% to 20% for a fund that leads. It exists because of the power law. A fund that ends up owning 4% of its one big winner cannot return capital even when it picks correctly.

The first amount a fund puts in, typically 2% to 3% of fund size. A $40M fund holding back half for reserves and planning thirty first cheques lands near $700K each.

The smallest amount a fund can write and still have it matter. Rarely published, and a harder filter than thesis.

A fund of thirty companies expects about half to return nothing and another third to return roughly what went in. One company has to pay for all of them. Partners therefore underwrite how big you could get rather than whether you will survive, which is why good companies get passed on.

Divide a fund's typical first cheque by the share it aims to own and you get the highest valuation it can pay. A partner who opens by saying they write $1.5M cheques and like to own about 15% has just told you their ceiling is a $10M post-money, and nobody said the word valuation. Both numbers were fixed when the fund was raised. Run it before the meeting.

The range of funds that can actually lead your round. Multiply the round by 0.6 to estimate the lead cheque, divide by 0.025 for the middle of the band, then halve and double for the edges. A $2M round at a $10M post gives roughly $30M to $100M. Raising a small round at an ambitious valuation is the most reliable way to fall outside every band at once.

The lead sets terms, usually takes half to two-thirds of the round, and does the diligence others rely on. “We'd want to lead” is often an ownership statement wearing a control costume.

The pile of comparable companies a partner files you into before thinking about you specifically. An appraiser does not price a house by feel; they pull three similar recent sales. The class gets chosen before anyone has considered your company seriously, and once you are in one, your numbers stop meaning anything on their own. Revenue is fast or slow, your valuation reasonable or greedy, your team strong or thin, all relative to the pile. Calling yourself "AI for logistics" to catch attention files you against companies with research teams and proprietary models. Nothing about the business changed. The yardstick did.

An introduction from someone the investor already trusts. We tracked 1,336 investor outreaches from 108 founders raising on CherryPitch and followed each from first email to first cheque. Warm intros lifted the first reply and the first meeting, then made no measurable difference to whether a founder moved toward a round. A curated investor list pulled 28% replies against 12% for a self-sourced one. A finished deck sent cold beat an unfinished deck sent warm.

Contacting an investor with no introduction. It works when the fit is real and the deck is finished, and it fails for the eight reasons above far more often than because it was cold.

Evidence that people want what you built. "Your traction is slow" is a comparison, made against a set of companies nobody named for you, and a different set produces a different verdict from identical numbers.

A short non-binding document setting price and terms. It starts real diligence rather than ending the process, and most of what matters sits in the terms rather than the valuation.

The checking that happens once interest turns serious. References, customers, financials, legals, sometimes code.

A shared folder holding the documents diligence will ask for. You do not need one before you pitch.

What the company is agreed to be worth before the new money arrives.

Pre-money plus the amount raised. When an investor says they like to own 15%, they mean 15% of the post-money.

The drop in your ownership percentage when new shares are issued. Getting diluted is how a company grows. The question is what you got for it.

The record of who owns what. Investors read it to see whether the founders still own enough to stay motivated for another five years, and whether an earlier round left something awkward behind.

Shares reserved for future hires, usually held back before a priced round closes. Investors often require the pool to be topped up in the pre-money, which dilutes founders before the new money arrives. Size it from your hiring plan for the next twelve to eighteen months, not from a default percentage.

Simple Agreement for Future Equity. A document that gives an investor the right to shares later, usually at the next priced round, without setting a valuation today. The cap and discount are the only price terms that matter, and both are negotiable.

Debt that converts to equity at the next round, with interest accruing until then. Older than SAFEs in Silicon Valley and still common outside the US. The maturity date is the one that can force an uncomfortable conversation if the round takes longer than expected.

The order in which proceeds are paid out if the company sells for less than everyone hoped. A 1x non-participating preference means investors get their money back first, then everyone splits what is left as common stock.

The right to invest again in your next round to maintain ownership percentage. Useful for angels who helped early. At seed, the question is whether exercising them is worth the check size relative to the lead.

The share class investors buy in a priced round. It sits above common stock in the payout order and carries the terms in the term sheet. Founders keep common; employees usually get options on common.

Earning your shares over time, typically four years with a one-year cliff. Standard for founders too in any round with institutional money. Unvested shares return to the company if someone leaves early.

Protection for investors if you raise the next round at a lower price. Full ratchet is aggressive; broad-based weighted average is standard. The difference matters when a down round happens.

A liquidation preference that also shares in the remaining proceeds after the preference is paid. Less common than it used to be at seed, but worth reading carefully in later-stage term sheets.

A clause letting majority shareholders force minority holders to sell in an acquisition. You will not see it at seed. You will see it before a serious exit if the cap table has gotten complicated.

Sometimes literal, and a fund whose stage sits above yours is telling you the truth. From a fund that does write at your stage, it is the politest available exit. Ask what would make it not too early. A specific answer means the door is open. A vague one is your answer.

Almost always a no that leaves the room warm. A real version comes with a named milestone and a date.

Usually a category error they will not spell out, most often problem type. They fund a different layer of the stack, and saying so sounds colder than this.

Frequently about their fund rather than your company. See dry powder.

An ownership statement more often than a control one. They are telling you how much of the round they need, which tells you what valuation works for them.

A comparison against a reference class nobody named for you.

Thesis language. If that is the screen, the conversation was decided on the team slide.

Sometimes process, sometimes the start of a no. Ask who else needs to see it and what they will want to know. A partner who is championing you answers specifically.

Honest and useful. They can still come in, and you need a lead before they will move. Treat it as a conditional yes and go find the lead.