soft circle

Definition

Verbal commitments from investors to participate in a round that aren't legally binding, giving founders a sense of momentum that may evaporate when term sheets arrive. It's Schrödinger's capital raise.

Example Usage

We had $5M soft circled for our Series A, but only $2M converted to actual commitments when the market turned.

Origin

Venture capital fundraising vernacular, playing on 'soft commitment'

Fun Fact

Experienced founders know soft circles are worth approximately zero until signed term sheets arrive—they're often just polite ways to stay warm on a deal.

Source: Venture capital commitment and fundraising terminology

Related Terms

Beginner

Traction

Evidence that people actually use your product, which is the startup world's version of proof of life. Investors ask about traction the way parents ask about grades -- they already suspect the answer is disappointing but want to hear you say it.

🚀 Startup / VC

Intermediate

runway extension

Actions taken to make existing capital last longer, typically through cost-cutting, down-rounds, or revenue generation—whatever keeps you alive until the next funding round. Financial life support for startups.

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gross margin

Revenue minus cost of goods sold, expressed as a percentage—the fundamental measure of whether your business model makes sense before accounting for all those pesky operating expenses. VCs want this above 70% for SaaS.

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Beginner

inbound interest

When investors, customers, or acquirers proactively reach out to a startup rather than being solicited. It's the entrepreneurial equivalent of being asked to the dance instead of doing the asking.

🚀 Startup / VC

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innovative

The adjective slapped on every product, service, and startup pitch deck to signal 'we're doing something allegedly new.' Something innovative is supposed to be groundbreaking and forward-thinking, though these days it often means 'we added AI to it.' If your company isn't innovative, you're basically admitting you're stuck in 2005 with a flip phone.

🚀 Startup / VC

Intermediate

unfair advantage

A structural competitive edge that's difficult or impossible for competitors to replicate, like proprietary technology, exclusive partnerships, or regulatory capture. What founders claim to have and what actually exists rarely overlap perfectly.

🚀 Startup / VC

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