Entrepreneur Dictionary for Startups

The entrepreneur dictionary for startups contains terms and definitions commonly used by entrepreneurs, investors, accelerators, and others who interact with startup ventures and startup financing.
For more entrepreneur resources check out our Acronyms for Startups, Infographics, or Startup FAQ.

a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p | q | r | s | t | u | v | w | y | z

Reset list

P/E - Price to Earnings

P&L - Profit and Loss Statement

PaaS - Platform as a Service

PageRank - An algorithm which provides a measure of the relative importance of internet web pages and returned search results.⁶

Pari Passu - At an equal rate or pace, without preference.³

Participating Preferred - A preferred stock in which the holder is entitled to the stated dividend and also to additional dividends on a specified basis upon payment of dividends to the common stockholders.³

Participating Preferred Stock - Preferred stock that has the right to share on a pro-rata basis with any distributions to the common stock upon liquidation, after already receiving the preferred-liquidation preference.³

Partnership - A nontaxable entity in which each partner shares in the profits, losses, and liabilities of the partnership. Each partner is responsible for the taxes on its share of profits and losses.³

Partnership Agreement - The contract that specifies the compensation and conditions governing the relationship between investors (LPs) and the venture capitalists (GPs) for the duration of a private equity fund’s life.³

Pay to Play - A term in VC financing that requires investors to participate in future down-valuation financings of the company, or else suffer punitive consequences (such as getting their Preferred stock converted into Common stock). One reason why investors keep some dry powder on hand.⁷

Peer to Peer Lending - A relatively new type of online financing solution through which individuals lend money to other individuals or small businesses.⁷

Penny Stocks - Highly speculative, lower priced offerings which sell at less than $5/share.⁶

Performance Based Vesting - Under performance-based vesting, options Vest only if specified performance criteria are met. For example, options may vest if annual earnings per share exceed a certain target by a specified date.⁹

Piggyback Registration - A situation when a securities underwriter allows existing holdings of shares in a corporation to be sold in combination with an offering of new public shares.³

PIK - Payments in Kind

PIK Debt Securities - (Payment in Kind) PIK Debt are bonds that may pay bondholders compensation in a form other than cash.³
- Synonyms: Payment in Kind, Payment In-Kind

PIPE - Private Investment for Public Equity.

Pipeline - The continuing flow of upcoming business or underwriting deal opportunities .⁶

Pitch - A presentation in which a startup founder attempts to persuade an investor of the viability of their company. The presentation spectrum varies based on the specific purpose of the pitch. Brief presentations in which an entrepreneur provides a 30 - 60 second overview of their idea, business model and marketing strategy, with the purpose of attaining a followup audience with an investor are described as elevator pitches. Formal, detailed presentations utilizing power point type slide decks, with the specific objective of seeking investment from angel groups or VCs, are known as investment presentation pitches.⁶

Pitch Deck - A presentation created by entrepreneurs that details the attributes of a startup opportunity in order to help the entrepreneurs communicate it with investors, in their efforts to raise money to fund their venture. The presentation, which typically includes approximately a dozen slides, provides a summary of the startup’s business plan, and helps investors determine if they have a continued interest in evaluating the company.⁶

PIV - Pooled Investment Vehicle.

Placement Agent - The investment bank, broker, or other person that locates investors to purchase securities from the Company in a private offering, in exchange for a commission.³

Plain English Handbook - The Securities and Exchange Commission online version of “Plain English Handbook: How to Create Clear SEC Disclosure Documents.”⁶

Platform as a Service - A cloud computing service category which provides a foundation upon which customers can develop, operate and manage multiple app functionalities without the need to develop the underlying infrastructure.⁶
- Synonyms: PaaS

PM - Project Manager

POC - Point of Contact

POC - Proof of Concept

Poison Pill - A right issued by a corporation as a preventative to a takeover measure. It allows right holders to purchase shares in either their company or in the combined target and bidder entity at a substantial discount, usually 50%. This discount may make the takeover prohibitively expensive.³

Pooled Investment Vehicle -

A legal entity that pools various investors’ capital and deploys it according to a specific investment strategy.⁸

Portal - The second type of "Intermediary" authorized by the JOBS Act to facilitate securities-based crowdfunding, providing legally-mandated information to potential investors, and then managing transfer of the offered funds to the issuing companies in return for an equity ownership stake in or debt instrument from the issuing company.¹

Portfolio - A strategic collection of startup companies invested in by an angel, angel group or Venture Capital Fund.⁶

Portfolio Companies - Startups and other companies in which an angel group, venture capital fund or private equity firm have invested.⁶

Post-money Cap Table - A cap table depicting the ownership of the founders and investors in terms of absolute quantities of shares or units, depending upon entity type, and percentages of total ownership they represent. These ownership stakes and the related analyses, typically represent the stakeholders of a startup venture and also provides analysis of equity dilution. The table depicting the value of the entity and equity holdings by each of the stakeholders after an investment by new investors is a post-money cap table.⁶

Post-money Valuation - The valuation of a startup company immediately following it's most recent round of financing calculated by taking the product from multiplying the startup's total number of shares or units outstanding by the share or unit price of this latest financing round.⁶

PPC - Pay per Click

PR - Public Relations

Pre-money Cap Table - A cap table depicting the ownership of the founders and investors in terms of absolute quantities of shares or units, depending upon entity type, and percentages of total ownership they represent. These ownership stakes and the related analyses, typically represent the stakeholders of a startup venture and also provides analysis of equity dilution. The table depicting the value of the entity and equity holdings by each of the stakeholders prior to an investment by new investors is a pre-money cap table.⁶

Pre-money Valuation -

The company’s value immediately before funding. If Post-Money Valuation = $2.5M and the company raised $500K, then the pre-money valuation = $2M.²
The valuation of a company prior to a round of investment. This amount is determined by using various calculation models, such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present cash value and a comparative analysis to comparable public and private companies.³

Preemptive Right - A shareholder's right to acquire an amount of shares in a future offering at current prices per share paid by new investors, whereby his/her percentage ownership remains the same as before the offering.³

Preferred Dividend - A dividend ordinarily accruing on preferred shares payable where declared and superior in right of payment to common dividends.³

Preferred Stock -

A class of ownership that has a higher claim on assets than Common Stock. In the event of Liquidation, preferred stock shareholders have priority over earnings and assets and generally earn dividends, but forego voting rights.²
A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. This preferred stock is convertible into common stock at the time of an IPO.³
This is a type of corporate share where the holders can exercise more rights, preferences, and privileges than those with common stocks. It is often issued by private corporations or enterprises that have not gone public yet. Both angel investors and venture capitalists prefer to invest with preferred stock because of the superior rights and protective provisions associated with these shares.⁴

Prepaid Warrant - A prepaid warrant is a warrant issued by an issuer entitling the holder to exercise into a specified number of different securities, for no additional financial consideration, during a specified time period.⁹

Private Companies - Companies that are not publicly traded on the stock market.⁷

Private Equity -

A company ownership position that is not listed and cannot be traded on a public securities exchange. Issuance, ownership and exchange of private securities are regulated differently from those of public securities under federal and state law.¹
Equity securities of companies that have not “gone public” (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange, any investor wishing to sell securities in private companies must find a buyer in the absence of a marketplace. In addition, there are many transfer restrictions on private securities. Investors in private securities generally receive their return through one of three ways: an initial public offering, a sale or merger, or a recapitalization.³
Private equities are equity securities of unlisted companies. Private equities are generally illiquid and thought of as a long-term investment. Private equity investments are not subject to the same high level of government regulation as stock offerings to the general public. Private equity is also far less liquid than publicly traded stock.⁵

Private Investment for Public Equity -

Private offering followed by a resale registration.³

Private Offering/Private Placement - Sale of unregistered, restricted securities by the company.³

Private Placement -

Also known as a Reg. D offering. The sale of a security directly to a limited number of investors in a private transaction.³
Private placement is a term used specifically to denote a private investment in a company that is publicly held. Private equity firms that invest in publicly traded companies sometimes use the acronym PIPEs to describe the activity. Private placements do not have to be registered with organizations such as the SEC because no public offering is involved.⁵

Private Placement Memorandum - Also known as an Offering Memorandum. A document that outlines the terms of securities to be offered in a private placement. Resembles a business plan in content and structure.³

Private Securities - Private securities are securities that are not registered and do not trade on an exchange. The price per share is set through negotiation between the buyer and the seller or issuer.³

Pro Forma - A pro forma is a description of financial statements that have one or more assumptions or hypothetical conditions built into the data. A financial projection based on assumptions. Also, refers to a statement of income and balance sheets that exclude non-recurring items.⁹

Product Market Fit - Product Market Fit

Professional Partner - Services and professional partners of the startup entity typically including, but not limited to their commercial attorney, intellectual property attorney, accountant / CPA, consultants and contract development partners.⁶

Promissory Note - A legal document under which the borrower, (maker of the note) commits to re-pay the lender, (holder of the note) the principal amount owed as represented by the note. This legal document, or contract between the maker and the holder typically includes terms depicting agreed details related to the arrangement, including among other items, interest rates, reporting requirements and maturity dates.⁶

Proprietary Deal Flow - When an investor has an opportunity to review a deal before other potential investors.⁷

Prospectus - A formal written offer to sell securities that provides an investor with the necessary information to make an informed decision. A prospectus explains a proposed or existing business enterprise and must disclose any material risks and information according to the securities laws. A prospectus must be filed with the SEC and be given to all potential investors. Companies offering securities, mutual funds, and offerings of other investment companies including Business Development Companies are required to issue prospectuses describing their history, investment philosophy or objectives, risk factors, and financial statements. Investors should carefully read them prior to investing.³

PSA - Purchase Sales Agreement

PTE - Part-time Employee

PTO - Paid Time Off

Public Company -

A company that has securities that have been sold in a registered offering and that are traded on a stock exchange or NASDAQ. Must be a Reporting Company under SEC rules. Often used incorrectly to describe companies that are only Reporting Companies and that have not conducted a registered offering under Securities Act.³
Under SEC rules, a company that decides to go “public” offers their securities (stock, bonds, liabilities) to be sold in a registered public offering. Through the sale of such assets, a corporation can raise capital for their company, employees, or executive staff. These public offerings are often traded on a stock exchange.⁴

Put - A contractual term/condition which provides the investor the option to compel the company to purchase their shares.⁶

Put option - The right to sell a security at a given price (or range) within a given time period.³

PV - Page View

Notes: