dry powder

Definition

Unspent capital sitting in a VC fund, waiting to be deployed into investments. The ammunition that lets VCs act fast when hot deals emerge or support portfolio companies needing emergency cash.

Example Usage

The fund still had $150M in dry powder after their first year, giving them flexibility to lead rounds without going back to LPs for more capital.

Origin

Military term for gunpowder kept dry and ready to use, adopted into finance in the 1980s-1990s

Fun Fact

Global VC dry powder reached over $500 billion in 2022—record amounts of cash sitting idle while investors struggled to find deals at reasonable valuations.

Source: Investment management and financial journalism terminology

Related Terms

Intermediate

pre-money valuation

What investors claim your company is worth before they invest—a number that's actually meaningless but gets thrown around in press releases. Add the investment amount to get post-money, which is what your ownership percentage is actually based on.

🚀 Startup / VC

Intermediate

dilution

The soul-crushing moment when a startup issues new shares, and existing shareholders watch their ownership percentage shrink faster than a wool sweater in a hot dryer. While you still own the same number of shares, you now own a smaller slice of the pie—assuming the company actually grows enough to justify the dilution. It's the price founders pay for other people's money, and the reason early employees cry into their vested options.

🚀 Startup / VC

Intermediate

ARR

Annual Recurring Revenue -- the amount of subscription money a company expects to collect over a year, assuming nobody cancels, which they will. It's the startup metric most likely to appear in fundraising decks and least likely to match reality.

🚀 Startup / VC

Intermediate

operator

A VC or advisor who has actually built and run companies rather than just invested in them from the sidelines. The startup equivalent of a war veteran versus someone who just played Call of Duty.

🚀 Startup / VC

Intermediate

pattern matching

When VCs make investment decisions based on superficial similarities to previous successful startups rather than rigorous analysis. It's why they love Stanford dropouts building social apps in their dorm rooms.

🚀 Startup / VC

Beginner

entrepreneur

A glamorized term for someone who decided that working for themselves would be less stressful than having a boss (spoiler: they were wrong). These brave or foolish souls start their own ventures, risking everything from savings to sanity in pursuit of the dream of being their own boss and working only 80 hours a week instead of 40. Every LinkedIn bio now includes this word because 'unemployed but optimistic' doesn't have the same ring to it.

🚀 Startup / VC

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