dragon

Definition

A startup that returns an entire venture fund's value through a single investment, making every other deal in the portfolio irrelevant. Rarer than unicorns and more impactful than a hundred modest successes combined.

Example Usage

Their 2010 investment became a dragon that returned 100x, letting them ignore the other 47 failures in that fund.

Origin

Venture capital terminology evolved from the unicorn nomenclature

Fun Fact

Top-tier VC funds are built on finding 1-2 dragons per fund; everything else is essentially a rounding error in their IRR calculations.

Source: Venture capital performance terminology

Related Terms

Advanced

washout round

A financing so dilutive that existing shareholders are essentially wiped out, often following multiple bridge rounds and broken promises. The financial equivalent of starting over but with more emotional baggage.

🚀 Startup / VC

Beginner

GP

General Partner, the VC fund managers who make investment decisions and carry legal liability for the fund's operations. They're the ones whose names are on the door and whose reputations are on the line.

🚀 Startup / VC

Advanced

carve-out

Reserved portion of an acquisition's proceeds specifically allocated to employees or specific shareholders, ensuring they benefit even if the waterfall would otherwise drown them. Exit sharing mandated by negotiation or generosity.

🚀 Startup / VC

Advanced

participating preferred

Preferred stock that gets both its money back first AND participates in remaining proceeds with common stockholders. The 'have your cake and eat it too' of liquidation preferences.

🚀 Startup / VC

Beginner

founder vesting

A schedule requiring founders to earn their equity over time, typically 4 years with a 1-year cliff. The investor-imposed acknowledgment that founding a company doesn't mean you'll stick around to build it.

🚀 Startup / VC

Intermediate

moats

In medieval times, a water-filled ditch that kept invaders at bay; in modern business, the metaphorical competitive advantages that protect a company from rivals trying to steal its lunch money. Warren Buffett popularized this term to describe sustainable competitive advantages like strong brands, network effects, or regulatory barriers. The wider the moat, the harder it is for competitors to storm your castle and the more VCs will swoon over your pitch deck.

🚀 Startup / VC

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