Concepts

LAST REVIEWED 2026-09 · ONE PAGE PER TERM · EVERY PAGE CARRIES A QUOTE FROM THE ROOM

Each concept is one page: a plain-language definition, why it matters, what a practitioner actually said about it, and where founders get it wrong. Every page links back to the playbook that covers the decision in full. The one-page glossary still exists if you want everything on a single screen.

Exits

• Add-backs — Owner expenses added back to EBITDA for a sale; optimize for taxes while operating, recast for enterprise value before you sell.
• Customer concentration — The share of revenue from your largest customer. Buyers flag it above 15%; above 25% it changes the deal structure.
• Earn-out — Exit proceeds parked against post-close milestones, usually 25–50%. Can be starved by the acquirer unless the deal funds your roadmap.
• EBITDA multiple bands — The EBITDA ranges private equity prices against. Crossing a threshold rerates the whole company.
• Letter of intent (LOI) — The non-binding offer that opens diligence. Your price ceiling, not your floor.
• Quality of earnings — The buyer’s review of whether your revenue and margins are what you say they are.
• Strategic vs. financial buyer — Two acquirers, two pricing logics: build-vs-buy heuristics vs. transaction multiples.

Fundraising and terms

• Investor qualification — Ask the fit questions before you pitch: active? last check? deployment stage? Then diligence them back.
• Liquidation preference — Who gets paid first at a sale. 1x non-participating is the standard; anything above it is a red flag.
• Material-change update — Three sentences, no ask, sent to investors who passed whenever something real changes.
• Pre-money vs. post-money — Whether the valuation includes the new money. Confirm it in writing before negotiating anything else.
• SAFE — An IOU for preferred stock. Not debt, not equity; the default instrument under roughly $5M.
• Valuation cap — The maximum valuation a SAFE converts at. Scale it to the raise or you sell the company by accident.
• Venture debt — Senior, non-converting debt underwritten to your next equity round. An accelerant, never a rescue.

Equity and legal

• 83(b) election — The 30-day filing that taxes restricted stock at grant instead of at every vest.
• 409A valuation — The fair-market value that sets option strike prices. The one valuation you want low.
• Advisor equity — 0.1–0.5% on one to two years of vesting. Never a percentage of money raised.
• Founder vesting — Four years, monthly, one-year cliff, for every founder including you.
• IP assignment — The signed transfer of work product to the company, from everyone who ever touched the code. Never call helpers volunteers.

Getting customers

• Buying committee — Champion, economic buyer, users, procurement, security. The champion is not the committee.
• Customer development — Learning and selling as one funnel: score the pain, book the next step, never end a call without one.
• Founder-led sales — The phase where founders close, because the learning cannot be delegated. There is no autopilot for GTM.
• Internal champion — The buyer-side person who closes the deal in rooms you are not in. Arm them.
• Pilot vs. paid contract — A customer pilot is paid, time-boxed, and ends in a PO. A design-partner discount is traded for proof points, not used as a substitute for the deal.
• Price-to-pain ratio — Price at about one-tenth of the buyer’s quantified pain, anchored high and discounted visibly.
• XYZ hypothesis — X% of market Y will pay $Z, tested with the cheapest prototype until it comes back true 70–90% of the time.

Building the company

• Data moat — Of algorithms, compute, and data, the only defensibility a startup can own.

More concepts are added as sessions cover them. Missing one? It probably gets asked in the room; FounderNexus is where it gets answered.