GIGABOOST.AI

Reference

Fundraising & Investor
Acquisition Glossary

Precise, authoritative definitions for every term founders, syndicators, and capital raisers encounter — from SEC regulatory frameworks to AI-driven investor acquisition metrics. Definitions include citations to SEC.gov, FINRA.org, and academic sources where applicable.

A

Accredited Investor

Defined under SEC Rule 501 of Regulation D. An individual qualifies as an accredited investor if they have earned income exceeding $200,000 (or $300,000 jointly with a spouse or spousal equivalent) in each of the two most recent years, with a reasonable expectation of the same income level in the current year. Alternatively, an individual qualifies by having a net worth exceeding $1 million, excluding the value of their primary residence. Entities — including corporations, partnerships, LLCs, and trusts — may qualify if they have assets exceeding $5 million or if all equity owners are accredited investors. Effective 2020, professional certifications (Series 7, 65, or 82 license holders) also qualify. This designation gates participation in most Regulation D private offerings.

Angel Investor

An individual who provides capital for a business startup or early-stage company, typically in exchange for convertible debt or ownership equity. Angels invest their own personal funds — not institutional or pooled capital — which distinguishes them from venture capital funds. Typical angel investment size: $25,000–$500,000 per deal. Angels often invest at the pre-seed or seed stage before institutional VCs engage. Many angel investors are former founders or executives who provide strategic value alongside capital. Organized angel groups (e.g., AngelList syndicates) can aggregate $500K–$2M+ per deal across multiple individual angels.

AUM (Assets Under Management)

The total market value of investments that a fund or financial institution manages on behalf of its clients and investors. AUM is the primary metric used to gauge a fund's size, capacity, and market positioning. A fund with $100M AUM typically writes $1M–$5M checks per deal. A $500M AUM fund typically writes $5M–$25M checks. AUM directly informs whether a fund can participate in your round size. Investment guidelines at most funds restrict any single position to 5–15% of total AUM, making fund size the most reliable proxy for check size eligibility.

B

Broker-Dealer

A firm or individual registered with both FINRA and the SEC that buys and sells securities either for its own account (acting as a dealer) or on behalf of customers (acting as a broker). Broker-dealers are required intermediaries for many securities transactions, including certain Regulation A+ and Regulation CF offerings. They must comply with FINRA conduct rules, maintain net capital requirements under SEC Rule 15c3-1, and observe suitability obligations. Issuer compensation paid to a broker-dealer for capital raising typically ranges from 5–10% of gross proceeds plus warrants. Engaging an unregistered broker-dealer (a "finder") can rescind investor rights and expose issuers to SEC enforcement.

Burn Rate

The rate at which a company spends its cash reserves before achieving positive cash flow. Gross burn = total cash spent in a month. Net burn = total cash spent minus revenue received. A company with $500K in monthly operating expenses and $200K in monthly revenue has a net burn rate of $300K/month. Runway = current cash balance ÷ net burn rate (in months). Investors use burn rate to assess capital efficiency and urgency of fundraising. A fundraise is typically initiated with 9–18 months of runway remaining.

C

Cap Table (Capitalization Table)

A spreadsheet or formal ledger showing the equity ownership structure, dilution history, and economic value of equity in a company. A cap table lists all shareholders (founders, employees, investors), their ownership percentage, number of shares held, share class (common vs. preferred), and the economic and voting rights of each class. A clean, well-maintained cap table is a prerequisite for institutional investment. Common tools: Carta, Pulley, and Capshare. Material cap table issues — such as missing founder vesting, undocumented option grants, or unresolved convertible instruments — are a leading cause of deal delays during due diligence.

Carried Interest (Carry)

The share of a fund's investment profits allocated to the fund manager (General Partner) as performance-based compensation, separate from the management fee. The industry standard structure is 2% management fee + 20% carried interest (the "2-and-20" model). Carry is typically subject to a hurdle rate (commonly 8% preferred return to LPs) and a catch-up provision. In venture capital, carry is earned on realized exits — sale, IPO, or secondary — not on paper valuations. Carry is taxed as long-term capital gains when the holding period exceeds one year, which has been the subject of ongoing legislative debate in the US.

Cold Email Outreach

Unsolicited email sent to potential investors with whom the sender has no prior relationship or mutual connection. The primary scalable channel for direct investor acquisition. Industry average cold email reply rate in fundraising: 1–4%. AI-personalized outreach to thesis-matched investors achieves reply rates of 8–12%. Key performance drivers: subject line open rate, thesis fit score, personalization depth, and call-to-action clarity. Under CAN-SPAM (US) and CASL (Canada), commercial emails must include a physical address, honest subject lines, and a functioning unsubscribe mechanism.

Convertible Note

A form of short-term debt that converts into equity at a future financing round rather than being repaid in cash. Standard terms include a 15–20% discount to the next round's price and/or a valuation cap protecting early investors from dilution at high valuations. Notes also carry an interest rate (typically 5–8% per annum) that accrues and converts along with the principal. Convertible notes include a maturity date (commonly 18–24 months) at which repayment or conversion is required. Increasingly replaced by SAFEs at pre-seed stages because SAFEs carry no maturity date or interest obligation.

Credit (GIGABOOST.AI)

The unit of consumption in the GIGABOOST.AI platform. 1 credit = 1 investor fully scored by the AI engine against your raise profile. Each credit covers analysis across 25+ signals, including investment thesis alignment, check size range, preferred stage, geographic focus, sector specialization, co-investor patterns, and recent portfolio activity. Credits enable founders to prioritize outreach to the highest-fit investors rather than blasting unqualified lists. Unused credits roll over within the billing period.

D

Deal Flow

The rate and volume at which investment professionals receive business proposals and investment opportunities. Quality deal flow refers to proposals that substantively match an investor's documented thesis. Top-tier venture capital firms receive 1,000–3,000 pitches per year and fund approximately 1–2% of inbound. Institutional investors actively curate their deal flow through portfolio company referrals, co-investor networks, and conference participation. Deal flow quality, not quantity, drives investment performance — investors that see higher-quality, thesis-matched deal flow outperform on returns.

Dilution

The reduction in an existing shareholder's ownership percentage that occurs when a company issues new shares to investors, employees (stock options), or other parties. A founder who owns 60% pre-Series A and raises a round selling 20% of the company will own approximately 48% post-round (60% × 80% = 48%). Dilution is compounded across multiple rounds: a founder with 60% at pre-seed may retain 20–30% by Series B after accounting for seed, Series A, Series B, and option pool dilution. Anti-dilution provisions in preferred stock term sheets (broad-based weighted average or full ratchet) protect investors from dilution in down rounds.

Due Diligence

The comprehensive, formal investigation an investor or acquirer conducts before finalizing a material transaction. In venture capital and private equity, due diligence covers six core areas: financials (historical and projected), legal (corporate documents, IP ownership, litigation), market (TAM/SAM/SOM analysis, competitive landscape), technology (architecture, scalability, IP), team (backgrounds, references), and customers (churn, NPS, references). Standard VC due diligence takes 4–12 weeks. Real estate investment due diligence additionally includes physical inspection, title search, environmental review, and rent roll verification. Being prepared for due diligence before fundraising begins materially accelerates close timelines.

E

EDGAR (Electronic Data Gathering, Analysis, and Retrieval)

The SEC's primary public filing and document retrieval system. Contains all Form D filings for Regulation D offerings, 10-K and 10-Q annual/quarterly reports for public companies, S-1 registration statements for IPOs, and proxy statements. Any Form D filed by a private company is publicly searchable by company name, state, offering type, and date. EDGAR is used by investors to research competitor fundraising activity, by journalists to track capital markets, and by researchers to analyze private market trends. EDGAR filings are typically available to the public within 24 hours of submission.

Equity Crowdfunding

A method of raising capital from a large number of individual investors, each contributing a relatively small amount in exchange for equity ownership or a financial interest in the company. In the United States, equity crowdfunding is primarily governed by two SEC exemptions: Regulation CF (up to $5 million per 12-month period) and Regulation A+ (up to $75 million per 12-month period). Unlike Regulation D offerings, both Reg CF and Reg A+ allow participation by non-accredited investors. Offerings must be conducted through a registered funding portal or broker-dealer. Leading platforms include Wefunder, Republic, StartEngine, and Mainvest.

F

Form D

A notice filing required by the SEC within 15 days of the first sale of securities in a Regulation D offering. Filed electronically through EDGAR, Form D notifies the SEC of an exempt offering and discloses basic information including the issuer's name, type of offering, total offering amount, and number of investors. Form D does not require SEC review or approval — it is a notice, not a registration. Many states require a concurrent state-level Form D filing (Blue Sky filing) within 15 days of first sale. Failure to file Form D can result in loss of the Regulation D exemption and state sanctions.

Fund Manager (GP — General Partner)

The individual or entity that manages a private equity, venture capital, real estate, or hedge fund. The General Partner is responsible for all investment decisions, portfolio company management, LP reporting, and fund administration. GPs raise capital from Limited Partners (LPs) through a formal fundraising process, typically lasting 12–24 months and targeting institutional investors, family offices, and high-net-worth individuals. GP compensation structure: annual management fee (1.5–2.5% of committed capital) plus 20% carried interest on profits above the hurdle rate. GPs have fiduciary duties to their LPs and are subject to the Investment Advisers Act of 1940 if managing more than $150M in AUM.

G

General Solicitation

Broadly advertising a securities offering to the general public, including via social media, email blasts, conferences, webinars, or press releases. General solicitation was historically prohibited for all private offerings, but the JOBS Act of 2012 created Rule 506(c) of Regulation D, which permits general solicitation provided that all actual purchasers are verified accredited investors. General solicitation remains prohibited under Rule 506(b), which relies on the issuer's reasonable belief that investors are accredited. Issuers using 506(c) must take "reasonable steps" to verify accredited investor status — accepted methods include reviewing tax returns, bank statements, or obtaining written confirmation from a licensed professional (CPA, attorney, or broker-dealer).

I

Investor Acquisition

The systematic, repeatable process of identifying, engaging, nurturing, and converting investors for a securities offering. Investor acquisition applies B2B sales and demand generation principles to capital raising. Key funnel metrics: investor match rate (% of universe that fits thesis), outreach reply rate (1–12% depending on personalization), meeting conversion rate (20–40% of replies), and close rate (10–25% of meetings). Investor acquisition differs from traditional fundraising by treating the process as a scalable system rather than a relationship-dependent event. GIGABOOST.AI automates the identification and scoring layer of investor acquisition using AI-driven thesis matching across a database of 340,412+ investors.

Investor Thesis

An investor's documented framework and criteria for evaluating and selecting investments. A typical thesis specifies: target sector(s) (e.g., fintech, climate tech, commercial real estate), preferred stage (pre-seed through growth equity), target geography (e.g., North America, Southeast Asia), check size range (e.g., $100K–$500K), and preferred business model (SaaS, marketplace, asset-backed). Thesis alignment is the strongest single predictor of investment interest — outperforming network proximity, team pedigree, or the quality of the warm introduction. Publicly available thesis data sources: firm websites, LinkedIn, Crunchbase, AngelList, and Form D filings.

L

Lead Investor

The investor who anchors a funding round by committing the largest individual check, negotiating the term sheet, and often taking a board seat or observer rights. The lead investor's terms become the terms for the entire round — co-investors typically invest at the same price and on the same conditions. Having a credible lead investor significantly increases the likelihood of round completion, as follow-on investors use the lead's diligence as a signal. Identifying and securing a lead investor is typically the most time-intensive step in a fundraise, requiring 30–90 days of active engagement before commitment.

Limited Partner (LP)

An investor in a fund structure who provides capital but has no role in day-to-day investment decisions or fund management. LP liability is strictly limited to the amount of their capital commitment — they cannot be held personally liable for fund obligations beyond their investment. LPs include institutional investors (pension funds, endowments, foundations, insurance companies), family offices, sovereign wealth funds, fund-of-funds, and high-net-worth individuals. LP commitments are typically "called" over 3–5 years as the GP identifies investments. LPs receive distributions upon exit events (IPO, acquisition, secondary sale) according to the fund's waterfall structure.

M

Management Fee

An annual fee charged by a fund manager (GP) to cover the operational expenses of running the fund, including staff salaries, office costs, legal fees, and portfolio monitoring. Industry standard: 1.5–2.5% of committed or invested AUM per year. Management fees are paid regardless of fund performance and are distinct from carried interest, which is earned only on profits. During the investment period (typically years 1–5), the fee base is usually committed capital; during the harvest period (years 6–10), it often steps down and is based on invested or NAV. Management fees are deducted from investor distributions and reduce net LP returns.

P

Pipeline (Fundraising)

The structured, tracked set of investor relationships at various stages of the capital raise process, from initial identification through signed closing documents. A healthy fundraising pipeline typically contains 50–100 active contacts across 5–7 stages: targeted, contacted, replied, meeting scheduled, diligence, term sheet, and closed. Pipeline management requires a CRM or structured tracking system to maintain visibility into investor status, follow-up timing, and conversion rates at each stage. Founders who manage a pipeline systematically close rounds 40–60% faster than those relying on ad hoc relationship management.

Post-Money Valuation

The company's valuation immediately after a financing round is completed. Formula: Post-money = Pre-money valuation + New capital raised. Example: if a company has a $10M pre-money valuation and raises $2M, the post-money valuation is $12M, and the investor owns 16.7% ($2M ÷ $12M). Post-money valuation is the figure typically cited in press announcements ("raised $2M at a $12M post-money valuation"). Important: SAFEs and convertible notes do not set a post-money valuation at the time of investment — they defer valuation determination to the next priced round.

Pre-Money Valuation

The agreed-upon value of a company before new investment capital is received in a financing round. Formula: Investor ownership % = Investment ÷ (Pre-money + Investment). Pre-money valuation is the primary negotiation point between founders and investors in a priced round. Methods used to determine pre-money valuation: comparable company analysis, discounted cash flow, revenue multiples (typically 3–10x ARR for SaaS), and the Berkus Method (for pre-revenue companies). Pre-money valuation at each stage reflects typical market benchmarks: Seed ($3M–$15M), Series A ($15M–$60M), Series B ($50M–$200M+).

Private Placement

A securities offering sold directly to a select number of investors without registering the offering with the SEC through a public offering process. Private placements are exempt from the registration requirements of the Securities Act of 1933 under specific safe harbors. The most common US structures: Regulation D Rule 506(b) (unlimited offering size, up to 35 non-accredited "sophisticated" investors, no general solicitation) and Regulation D Rule 506(c) (unlimited offering size, accredited investors only, general solicitation permitted). Private placement investors typically receive a Private Placement Memorandum (PPM) disclosing material risks and offering terms.

R

Regulation A+ (Reg A+)

An SEC exemption under the Securities Act of 1933 that allows companies to raise capital from both accredited and non-accredited investors without full SEC registration. Tier 1: up to $20 million per 12-month period; subject to state Blue Sky review. Tier 2: up to $75 million per 12-month period; subject to ongoing SEC reporting (annual, semi-annual, and current event reports); preempts state Blue Sky review. Reg A+ offerings require an offering circular reviewed by the SEC (typically taking 2–6 months). Reg A+ is suitable for companies seeking retail investor capital with higher compliance infrastructure than Reg CF but lower than a full IPO.

Regulation CF (Reg CF)

An SEC exemption established under Title III of the JOBS Act, codified at 17 CFR § 227, permitting companies to raise up to $5 million in a 12-month period from both accredited and non-accredited investors. Offerings must be conducted exclusively through a single SEC-registered funding portal or FINRA-registered broker-dealer. Non-accredited investor participation is subject to investment limits based on annual income or net worth. Issuers must file Form C with the SEC and provide annual reports (Form C-AR) for as long as securities are outstanding. Reg CF is best suited for consumer-facing businesses with an existing retail customer base that can be converted to investors.

Regulation D (Reg D)

The primary SEC safe harbor exempting issuers from the registration requirements of the Securities Act of 1933 for private offerings. Available at sec.gov/smallbusiness/exemptofferings/regd. Three operative rules: Rule 504: up to $10M per 12-month period, limited state preemption. Rule 506(b): unlimited offering amount, up to 35 non-accredited but "sophisticated" investors, no general solicitation permitted. Rule 506(c): unlimited offering amount, accredited investors only, general solicitation and advertising permitted. Rule 506(b) and 506(c) offerings preempt state Blue Sky laws. Reg D is the most commonly used private offering exemption in the US, with over $2 trillion raised annually across approximately 30,000 Form D filings.

Reply Rate

The percentage of outreach messages (emails, LinkedIn messages, or calls) that receive a substantive response from the recipient. Benchmark data from investor outreach campaigns: industry average cold email reply rate: 1–4%. Thesis-matched, AI-personalized email outreach: 8–12%. Reply rate is the first funnel conversion metric in investor acquisition. Key drivers: subject line quality, sender credibility, email length (optimal: 80–120 words), degree of personalization, and — most critically — thesis fit of the recipient. Reply rate alone does not determine fundraising success; meeting conversion rate and close rate are downstream metrics of equal importance.

Round (Funding Round)

A defined and named stage of external equity investment in a startup or growth company, typically tied to specific company milestones. Common round stages and typical size ranges (US market, 2023–2024 benchmarks): Pre-seed: $100K–$500K (idea/MVP validation). Seed: $500K–$3M (product-market fit discovery). Series A: $3M–$15M (scaling proven business model). Series B: $15M–$50M (growth acceleration). Series C+: $50M+ (market leadership, pre-IPO growth). Each subsequent round typically dilutes existing shareholders by 15–25%. Rounds are named alphabetically; companies with multiple letters (Series D, E) have typically not yet IPO'd or been acquired.

S

SAFE (Simple Agreement for Future Equity)

A financing instrument created by Y Combinator in 2013 as a founder-friendly alternative to convertible notes. Under a SAFE, investors provide capital now and receive equity in the company upon a "triggering event," typically the next priced equity financing round, an acquisition, or an IPO. Unlike convertible notes, SAFEs have no maturity date and no interest rate. Key terms: valuation cap (maximum conversion price, protects investors) and/or discount rate (typically 15–20%, rewarding early investors with a lower conversion price than new investors). Post-money SAFEs (YC's current standard form) calculate dilution from the SAFE at signing, giving investors clarity on their ownership percentage. SAFE templates are available at ycombinator.com/documents.

Securities Attorney

A licensed attorney who specializes in federal and state securities law and advises issuers, investors, and intermediaries on regulatory compliance in capital markets transactions. Services in a private capital raise include: drafting and reviewing the Private Placement Memorandum (PPM), subscription agreement and investor questionnaire, Form D filing, state Blue Sky filings, and responding to SEC or FINRA inquiries. Engagement of a securities attorney is required for most Regulation D private placements and is advisable for any offering involving third-party investors. Legal fees for a standard Reg D offering typically range from $5,000–$25,000 depending on complexity.

Syndication

The practice of pooling capital from multiple individual investors, coordinated and led by a single lead investor (the syndicator or sponsor), to collectively fund a single investment opportunity. Common in real estate private equity, where a sponsor identifies an asset, structures the offering, raises capital from LPs, and manages the investment in exchange for a promote (carried interest) and asset management fees. Also prevalent in venture capital through platforms like AngelList, where a lead angel syndicates a deal to their network of followers. Syndication enables smaller investors to access deal sizes beyond their individual capacity while allowing sponsors to deploy larger amounts of capital per deal.

T

Term Sheet

A non-binding letter of intent or memorandum of understanding outlining the key economic and governance terms of a proposed investment. A term sheet precedes the formal, legally binding investment agreement (stock purchase agreement, subscription agreement, or loan agreement). Key economic terms: pre-money valuation, investment amount, security type (preferred stock, convertible note, SAFE), liquidation preference (typically 1x non-participating), and anti-dilution protection. Key governance terms: board composition, information rights, pro-rata rights (right to participate in future rounds), and protective provisions (investor consent rights on major decisions). Exclusivity provisions in term sheets typically run 30–60 days, during which the issuer cannot solicit competing offers. NVCA model term sheets are the industry standard for US venture transactions.

Thesis Alignment

The degree to which a company or offering matches an investor's documented investment criteria across all relevant dimensions: sector, stage, geography, check size, business model, and specific technology or asset class preferences. Thesis alignment is the strongest single predictor of investment interest — more predictive than team pedigree, network proximity, or the quality of an introduction. Quantified benchmarks: thesis-matched cold outreach converts at 22–34% (from initial email to first meeting). A warm introduction to a wrong-fit investor converts at under 3% regardless of introduction source. GIGABOOST.AI scores each investor across 25+ thesis alignment signals before recommending outreach, enabling founders to prioritize the highest-probability conversations.

U

Unicorn

A privately held startup company valued at over $1 billion based on its most recent funding round or secondary market transaction. The term was coined by venture capitalist Aileen Lee in her November 2013 TechCrunch article "Welcome To The Unicorn Club: Learning From Billion-Dollar Startups." At the time of coinage, only 39 such companies existed globally. As of 2024, there are approximately 1,200+ unicorn companies globally, with the United States, China, and India accounting for the largest concentrations. Related valuation milestones: Centaur ($100M ARR), Decacorn ($10B+ valuation), Hectocorn ($100B+ valuation, e.g., SpaceX, ByteDance).

V

Valuation Cap

In a convertible note or SAFE, the maximum company valuation at which the investor's instrument will convert into equity, regardless of the actual valuation established at the next priced round. The valuation cap protects early investors from excessive dilution when a company raises its next round at a significantly higher valuation. Example: an investor holds a SAFE with a $5M valuation cap. The company later raises a Series A at a $20M pre-money valuation. The SAFE investor converts as if the company is valued at $5M — receiving 4x more equity per dollar invested than new Series A investors. A lower cap is more favorable to the investor; founders should negotiate caps reflecting realistic near-term valuation expectations.

Venture Capital (VC)

A form of private equity focused on professionally managed investment of pooled capital into early-stage, high-growth-potential startup companies in exchange for equity ownership. VCs raise capital from institutional LPs (pension funds, university endowments, sovereign wealth funds, fund-of-funds), deploy it into portfolio companies over a 3–5 year investment period, and generate returns through exit events (acquisition or IPO) during a 5–7 year harvest period. Target return profile: 3x fund (net to LP) = good; 5x+ = excellent. Individual portfolio companies must achieve 10x+ returns to compensate for the majority of investments that return less than invested capital. Typical fund lifecycle: 10 years (5-year investment period + 5-year harvest period), with optional 1–2 year extensions. Top-tier venture firms: Sequoia Capital, Andreessen Horowitz (a16z), Accel, Benchmark, General Catalyst.

W

Warm Introduction

An introduction to an investor facilitated by a mutual connection — typically a portfolio company founder, a co-investor, an LP, or a shared professional contact. Warm introductions are traditionally associated with higher response rates and perceived credibility. However, empirical outreach data shows that thesis fit is the dominant conversion factor, not introduction type. A cold email to a thesis-matched investor converts at 22–34% (to first meeting). A warm introduction to a wrong-fit investor converts at under 3% — regardless of the strength of the introduction. Founders should prioritize thesis alignment in targeting over the pursuit of warm intros to non-fitting investors. GIGABOOST.AI's thesis scoring quantifies fit before outreach, making every cold contact a high-quality engagement.

Put It Into Practice

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