extension round

Definition

Additional capital raised on the same terms as the previous round (like a Series A-1) rather than progressing to the next stage, buying time without the stigma of a flat or down round. The startup equivalent of taking an incomplete rather than failing the course.

Example Usage

We raised a $5M Series A extension to extend runway while we work toward the metrics needed for a proper Series B.

Origin

Venture capital financing terminology emerging in the 2010s as a face-saving alternative

Fun Fact

Extension rounds proliferated in 2022-2023 as startups tried to avoid down rounds while waiting for market conditions to improve.

Source: Venture capital financing structures and terminology

Related Terms

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memo culture

The internal practice at VC firms of writing detailed investment memos that analyze potential deals. Where partners commit their hottest takes to writing so they can be mocked later when wrong.

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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.

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seedbed

A literal plot of dirt prepped for seeds, or metaphorically, any environment ripe for nurturing nascent ideas—like Silicon Valley for startups or your uncle's garage for questionable business ventures. In startup parlance, it's where brilliant innovations and terrible ideas alike take root before anyone can tell which is which. The key difference from an incubator? Seedbeds are cheaper and smell more like actual dirt.

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portfolio construction

The strategy for how a fund allocates capital across different investments, stages, sectors, and check sizes. The art of arranging your bets so at least one or two have to work out mathematically.

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breaking the syndicate

When a startup seeks a lead investor for their next round who isn't part of their existing investor group, potentially signaling problems or a desire for fresh perspectives. It's the venture capital equivalent of changing friend groups.

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capital efficiency

The art of building a valuable company while raising as little outside funding as possible, preserving founder ownership and bragging rights. It's increasingly rare in an era of mega-rounds and bloated valuations.

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dnrtfa

did not read the f**king article...