phantom equity

Definition

Fake stock that feels like ownership but isn't, giving employees the illusion of having skin in the game without actual legal rights. It's participation trophy capitalism.

Example Usage

The startup offered phantom equity instead of real shares, which sounded great until acquisition time when it meant nothing.

Source: Startup compensation and equity structures

Related Terms

Advanced

vulture capital

Investors who prey on distressed startups, offering unfavorable terms when founders are desperate. They prefer the smell of burning runway in the morning.

🚀 Startup / VC

Beginner

warm intro

An introduction to an investor or customer through a mutual connection, vastly more effective than cold outreach. The difference between your email being read and being instantly deleted by an EA.

🚀 Startup / VC

Beginner

LP

Limited Partner, the institutional investors and wealthy individuals who provide capital to VC funds, essentially the VCs' VCs. They're the puppetmasters who rarely appear but whose capital enables the whole show.

🚀 Startup / VC

Intermediate

down-stack

Moving to build or sell products at a lower layer of the technology infrastructure, typically where margins are thinner but the market is larger. Often happens when companies realize their original niche is too small.

🚀 Startup / VC

Intermediate

deployment velocity

The speed at which a venture fund invests its committed capital, often scrutinized as a metric of both deal flow quality and fund discipline. Too slow suggests weak deal flow; too fast suggests poor judgment and FOMO.

🚀 Startup / VC

Advanced

signaling risk

The danger that passing on an investment or accepting certain terms sends negative messages to future investors. In VC, optics matter as much as economics—sometimes you reject money because taking it would look desperate.

🚀 Startup / VC

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