party round

Definition

A funding round with so many small investors that the cap table looks like a nightclub guest list—lots of names, minimal commitment from anyone. Usually signals either a hot deal everyone wants a piece of, or a desperate founder who couldn't land a lead investor.

Example Usage

After thirty meetings with no term sheet, the founders gave up and did a party round with twelve angel investors and their dentist.

Origin

Silicon Valley slang emerging in the 2010s during the angel investing boom, particularly after AngelList democratized startup investing

Fun Fact

Party rounds became so common in 2013-2014 that Y Combinator partners publicly warned against them, calling them a sign of weakness that could hurt future fundraising.

Source: Venture capital industry terminology

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distribution

The return of capital to limited partners when a fund exits an investment, either as cash or occasionally as stock, representing the magical moment when paper gains become real money. The VC equivalent of actually getting your lottery winnings instead of just holding a ticket.

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incubation

The magical period where startup founders burn through investor cash while "validating their business model," ostensibly nurturing their fledgling company from idea to viable business. Like hatching eggs, except the eggs cost millions of dollars and most of them produce nothing. Incubators and accelerators love this word because it makes burning money sound scientific and inevitable.

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zombie fund

A venture fund that's technically alive but has stopped making new investments, usually because performance is so bad that raising a follow-on fund is impossible. It shambles along, managing existing investments until the limited partnership agreement expires.

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vesting cliff

The sadistic waiting period before any of your stock options actually belong to you, typically one year. It's designed to prevent you from taking the job and immediately quitting, essentially holding your compensation hostage for good behavior.

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retention cohort

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