The Book of Jargon®

Acronym for Limited Partner.

A company that has gone through several Financing Rounds, but has not yet had an Exit.

When a startup begins offering a product or service to the public. A Launch typically follows a beta or testing period of the same product or service during which the startup tries to resolve any issues.

Investor who takes the roll of negotiating the Transaction Documents with the company on behalf of all Investors so that the company doesn’t get bogged down negotiating the round with multiple Investors. Lead Investor is not a legal title, but more of an implied or agreed upon role.

Statements placed on the back of Stock Certificates identifying certain restrictions or rights applicable to the Shares, a common example of which are Transfer Restrictions.

The bargaining power that a company or an Investor (or any other party) has with respect to one another. If a company needs money fast and has few available options, an Investor would have Leverage over the company. Conversely, a hot Unicorn with lots of Investors lined up at the door would have Leverage over the Investors, who will take less attractive terms just to get into the investment. See also FOMO.

A type of company and organizational form that combines many of the attributes of a corporation with attributes of a Partnership. Like corporations, the Equity holders in a Limited Liability Company (called members) generally do not have personal liability for the company’s liabilities and obligations. Like Partnerships (and unlike corporations), Limited Liability Companies are by default pass-through entities for tax purposes (although they can elect to be taxed like taxable corporations) and can by agreement decide on what rules the company must follow, including whether or not the Directors (called managers) have Fiduciary Duties to the members.

A type of Limited Partnership where the General Partner is not personally liable for the liabilities and obligations of the Partnership. To qualify as a Limited Liability Limited Partnership, a Limited Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation.

A type of Partnership that combines many of the attributes of a corporation with attributes of a Partnership, in which some or all of the partners have limited liability. To qualify as a Limited Liability Partnership, a Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation.

A partner in a Limited Partnership or Limited Liability Limited Partnership that generally does not have personal liability for the liabilities and obligations of the Partnership.

A Partnership with Limited Partners and at least one General Partner. To qualify as a Limited Partnership, a Partnership generally has to comply with the applicable statutory requirements in its state or other jurisdiction of formation.

Typically either a Change of Control or the Bankruptcy or insolvency of a company (where assets are sold and the proceeds distributed to the owners/creditors through a statutory process).

Aggregate amount of proceeds that are distributed to the Stockholders of a company in connection with a Liquidation.

Amount that a group of Stockholders are entitled to receive upon Liquidation, in preference to other groups of Stockholders, under the terms of the company’s Charter.

The ability to sell Shares of Stock and receive cash or other liquid assets (such as Public Company Stock).

In Startups, generally the transaction agreement entered into between a company and a bank for a Venture Debt Financing.

A period of time during which a Stockholder is not permitted to sell its Shares following a public offering, usually a 90 or 180-day period, depending on the type of offering that starts the Lock-Up period. The purpose of the Lock-Up is to help stabilize the Stock price following the offering by controlling supply of Shares that are trading in the market. See also Market Standoff Agreement.

The letters signed by Officers, Directors and other insiders setting forth the terms of their Lock-Ups. These are usually negotiated in connection with the Underwriting Agreement (which is where the Issuer’s Lock-up can generally be found). In Startups, Lock-Up provisions are often included in the Investor Rights Agreement or other equity grant documentation.