VC terms you need to know

Investing

Simple Agreement for Future Equity (SAFE)

A SAFE gives investors the rights to purchase stock in a future equity round, often with a specific cap and/or discount. No specific price per share is determined at the time of the initial investment.

They’re a simple and fast way to get early investments into a company. The SAFE was originally i

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Performance Metrics

Total Value to Paid-In Capital (TVPI)

TVPI is a measure of both the realized and unrealized value of a fund as a proportion of the total paid-in, or contributed, capital. It is calculated by (total value) / (paid-in capital) where total value is (distributions + net asset value). A TVPI over 1.00x means an investment’s value ha

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Fund Structure

Traditional Fund

Traditional funds typically do a “big bang” fundraise and begin deploying capital after the First Close. Once the fund is officially closed, they’re unable to accept new LPs.

That said, it’s not uncommon for fund managers to leave their fund “open” for several months while deploying and raising additional capital.

Ro

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Fundraising

General Partner (GP) 

A GP is a manager of a venture fund. They make decisions on how to invest the capital that LPs provide. 

Limited Partner (LP)

An LP is an investor into a venture fund. LPs provide the capital that fund managers invest, and typically have few required obligations outside of providing capital to the fund.&

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