The startup terms you’ll run into in your first year

You have an idea, a team, and at best an MVP. The money goes toward getting the product to its first users. Sources: angels, accelerators, friends and family. Typical amounts: tens, occasionally hundreds of thousands of dollars.

The product works, you have first users and signs of repeatable demand. The money goes toward finding a working growth model. The first funds appear at this stage.

The growth model is found, unit economics add up, and the task is to scale what already works. Investors examine your numbers, not your idea.

Expansion: new markets, new product lines, hiring. The amounts grow, and so do the reporting requirements.

An interim round between the main ones, when the money won’t stretch to the next stage. Sometimes a sign of normal operations, sometimes a red flag — it depends on what happened.

A corporation in the state of Delaware — the venture market standard. Funds invest in stock, and all of the industry’s documents are written for this structure.

The company’s founding document in Delaware: name, number of authorized shares, par value. Once it’s filed, the company exists.

The internal rulebook: how decisions are made, how the board of directors works, how shareholder meetings are held.

A written decision of the board of directors. Needed for the company’s key actions: opening a bank account, issuing shares, approving options.

The company’s mandatory representative in the state: receives official mail and notices from courts and tax authorities.

The company’s federal tax number. Without it you can’t open a bank account, set up Stripe, or file returns.

Delaware’s annual fee for the company’s very existence: due even with zero revenue. With the standard structure of 10M shares at $0.0001, it stays near the minimum.

The register of shareholders: who owns what stake, including options and future conversions. The first thing an investor opens.

Founder shares become yours gradually, usually over 4 years. It protects the company and your partners if someone leaves early.

The first vesting milestone, usually 1 year: leave earlier — you get nothing; make it — a full year’s worth of shares vests at once.

A stock option plan: a pool of shares reserved for employees. The main hiring tool when you can’t outbid Big Tech on salary.

An independent valuation of the company’s common stock. Required before granting options to employees: it sets the option exercise price.

A notice to the IRS: you lock in the tax on your shares now, while they’re worth almost nothing, instead of later, when the company has grown. Filed once, within 30 days of the stock issuance; the deadline cannot be recovered.

The shrinking of your stake when new shares are issued: after each round your percentage is smaller — but it’s a slice of a bigger pie.

Simple Agreement for Future Equity: the investor gives money now and receives shares at the next round. The gold standard is the Y Combinator template — it can be signed in a day. For a full breakdown with a calculator, see What Is a SAFE and How It Works.

The valuation ceiling in a SAFE: the maximum valuation at which the investor’s money converts into shares. The lower the cap, the more shares the investor gets at the round.

The company’s valuation before and after the investor’s money comes in. Post-money = pre-money + the round size; the investor’s stake is calculated from it.

A short document with the key terms of a deal: valuation, amount, investor rights. Not legally binding, but it locks in the agreement before the definitive documents.

The pre-deal review of a company: the investor examines the documents, the share structure, and the rights to the product. Mistakes found here cost you deal terms.

An agreement transferring the product (code, domain, brand) from the founder as an individual to the company. Removes the "who actually owns this?" question in due diligence.

Proof that demand repeats without your personal involvement in every sale. Not revenue or signups on their own, but a sustained trend.

How many months the company can survive at its current spending. The first question at almost any investor meeting.

How much the company spends per month beyond what it earns. Together with runway, it shows when it’s time to raise the next round.

The usual order: the company (Delaware C-Corp), founder stock with vesting, the 83(b) election within the first 30 days, IP Assignment, a clean cap table. After that you’re ready to sign a SAFE — we break down how it works in a separate article.

If you plan to raise from international investors — yes: most of the mechanisms described here (SAFE, options, 83(b)) work specifically within a US structure. Setting it up correctly from the start is cheaper than rebuilding it before a deal.

For venture fundraising — effectively yes: funds invest in stock, and SAFEs and option plans are built for a C-Corp. An LLC suits services and e-commerce, but converting it before a round costs time and legal fees.

Email us at support@corporatee.pro — we’ll break it down and add it to the glossary.