vulture capital

Definition

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

Example Usage

When we had two months of runway left, vulture capital came circling with term sheets featuring 3x liquidation preferences and full ratchet anti-dilution.

Origin

1980s financial slang, combining 'vulture' with 'venture capital'

Fun Fact

Some vulture capitalists specialize in 'zombie startups,' offering just enough money to keep them alive while extracting maximum control and preferential terms.

Source: Financial industry pejorative terminology

Related Terms

Advanced

zombie VC

A venture capital firm that's functionally dead but still managing old funds, unable to raise new capital but too undead to fully shut down. They're not investing in new companies but still collecting management fees from their limited partners.

🚀 Startup / VC

Beginner

graybeard

An experienced entrepreneur or advisor, typically older, who's seen multiple technology cycles and startup failures. They provide wisdom, pattern recognition, and constant reminders that everything has been tried before.

🚀 Startup / VC

Intermediate

down-round

A funding round at a lower valuation than the previous round, signaling either terrible execution or terrible timing. Triggers anti-dilution provisions and existential crises among founders.

🚀 Startup / VC

Intermediate

full-stack startup

A company that owns and controls every layer of its product or service delivery, from manufacturing to customer experience, rather than relying on existing infrastructure or platforms. It's vertical integration for the startup age.

🚀 Startup / VC

Advanced

non-participating preferred

Preferred stock that must choose between taking its liquidation preference OR converting to common and sharing the remaining proceeds—can't do both. The slightly-less-greedy version of investor terms.

🚀 Startup / VC

Advanced

super pro rata

The right to invest more than your proportional share in a subsequent round, allowing early investors to increase their ownership. Pro rata's aggressive older sibling who always wants more.

🚀 Startup / VC

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