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Startup funding glossary
Plain-English definitions of the terms you'll meet while raising money — from grants and subsidies to SAFEs, dilution and runway. Free, no jargon, written for Indian founders.
Funding Stages
The typical journey of startup capital — from the first cheque to late-stage mega-rounds — including what happens at each step and how investors evaluate you.
Pre-Seed
The earliest stage of startup funding, typically preceding a formal product launch.
Seed Funding
The first formal external funding round that a startup raises, typically after validating the problem and building an MVP.
Series A
The first major venture capital round, typically raised after a startup has demonstrated product-market fit with repeatable revenue, growing usage, or clear customer demand.
Series B
The second major VC round, focused on scaling a proven business model to the next level.
Series C and Beyond
Later-stage funding rounds for mature startups preparing for an IPO or large-scale market expansion.
Bridge Round
A short-term funding round raised between larger, priced rounds — typically when a startup needs additional capital to extend runway, hit specific milestones before a Series A or B, or bridge a seasonal cash-flow gap.
Down Round
A funding round in which the company's valuation is lower than in the previous round.
Grant Types
Different flavours of non-dilutive funding: government grants, CSR contributions, milestone-based programmes, and how they differ from debt or equity.
Grant
A sum of money given to a startup or organisation that does not need to be repaid and does not require giving up equity.
Non-Dilutive Funding
Any form of funding that does not require the founder to give up equity or ownership in the company.
CSR Funding
Corporate Social Responsibility funds — a portion of profits that Indian companies above certain revenue and profitability thresholds are legally required to spend on social impact under Section 135 of the Companies Act, 2013.
Milestone-Based Disbursement
A funding structure in which grant money is released in tranches as the startup achieves predefined milestones rather than as a single upfront payment.
Tranche
One portion or instalment of a larger funding amount that is disbursed in stages subject to the achievement of specific conditions or milestones.
Government Schemes & Bodies
Key Indian government ministries, departments, and schemes that run grant and funding programmes for startups — DPIIT, BIRAC, DST, MeitY, and more.
DPIIT Recognition
Registration with the Department for Promotion of Industry and Internal Trade that certifies an entity as a recognised startup under the Startup India initiative.
Startup India
A flagship Government of India initiative launched on January 16, 2016 by the Department for Promotion of Industry and Internal Trade (DPIIT) to build a strong ecosystem for nurturing innovation and startups in the country.
BIRAC
The Biotechnology Industry Research Assistance Council — a Government of India body under the Department of Biotechnology.
DST
The Department of Science and Technology — a Government of India ministry that funds deep-tech, science, and engineering startups through a portfolio of grant programmes.
MeitY
The Ministry of Electronics and Information Technology — a Government of India ministry that funds technology startups, with a particular focus on AI, cybersecurity, electronics, semiconductor design, and digital governance.
MoFPI
The Ministry of Food Processing Industries — a Government of India ministry that grants and subsidies for startups in food processing, cold chain logistics, agri-processing, and value-added food products.
NABARD
The National Bank for Agriculture and Rural Development — a development bank that funds startups and enterprises in agriculture, rural development, and allied sectors through a mix of grants, venture capital, and subsidised credit.
SISFS
The Startup India Seed Fund Scheme — a Government of India scheme administered by DPIIT with a corpus of ₹945 crore to provide seed funding to early-stage startups.
MSME / Udyam Registration
Registration under the Micro, Small & Medium Enterprises Development Act, now digitised as the Udyam Registration portal.
Investment & Equity
The mechanics of equity financing — valuations, dilution, convertible instruments, ESOPs, and the legal framework that governs startup investments.
Angel Investor
An individual who invests their own personal capital in early-stage startups in exchange for equity or convertible instruments.
Venture Capital (VC)
Institutional investment into high-growth startups in exchange for equity.
Equity
Ownership in a company represented by shares.
Dilution
The reduction in a founder's or existing shareholder's ownership percentage that occurs when a company issues new shares to investors, employees (via ESOPs), or other parties.
Convertible Note
A debt instrument that converts into equity at a future priced round, typically at a discount (usually 15–25%) to the next round's price and with a valuation cap that limits the price at which the note converts.
ESOP
Employee Stock Ownership Plan — a pool of shares (typically 10–20% of the company) set aside for employees, granting them the right to purchase company stock at a predetermined price (the strike price) after a vesting period.
Vesting
The schedule by which founders or employees earn their equity over time, typically measured in years of continued service.
Valuation
The estimated monetary worth of a startup, used to determine how much equity investors receive in exchange for their capital.
Term Sheet
A non-binding document that lays out the key terms and conditions of a proposed investment before the lawyers draft the full legal agreements.
Liquidation Preference
A right granted to preferred shareholders (investors) that determines the order and amount they're paid before common shareholders (founders and employees) in an exit — whether an acquisition, sale, or liquidation.
Anti-Dilution Protection
A contractual right that protects existing investors from having their ownership percentage and effective price-per-share devalued when a company raises a future round at a lower valuation than a previous round (a "down round").
Due Diligence
The investigation an investor conducts to verify a startup's claims and assess risk before finalising an investment, typically carried out after a term sheet is signed but before the definitive legal agreements close.
SAFE (Simple Agreement for Future Equity)
An investment instrument that gives an investor the right to receive equity in a future priced round, without being structured as debt — unlike a convertible note, a SAFE carries no interest rate and no maturity date.
Cap Table
A capitalization table — a spreadsheet or structured record showing who owns what percentage of a company, across every class of shareholder: founders, employees (via the ESOP pool), and investors (across each funding round).
Business Support
Organisations and programmes that help startups grow through mentorship, workspace, and structured growth programmes — accelerators, incubators, and bootstrapping.
Accelerator
A fixed-term, cohort-based programme (typically 8–16 weeks) that provides startups with mentorship, structured curriculum, networking opportunities, and funding — usually in exchange for 5–10% equity.
Incubator
An organisation that supports early-stage startups by providing workspace, mentorship, networking, administrative services, and sometimes funding — typically without a fixed time limit and without taking equity.
Bootstrap
Building and growing a startup using personal savings, revenue from early customers, or operational cash flow — without external investment.
Runway
The amount of time a startup can continue operating before it runs out of money, calculated as cash on hand divided by monthly burn rate (net cash outflow).
Legal & Regulatory
Laws, registrations, and compliance requirements that affect how startups raise and receive funding in India.
FCRA
The Foreign Contribution (Regulation) Act, 2010 — an Indian law that regulates the receipt of foreign funds by non-profit organisations, associations, and certain other entities.
Shareholders' Agreement (SHA)
A legally binding contract between a company's shareholders (founders and investors) that governs their relationship, rights, and obligations — separate from and in addition to the company's Articles of Association.
Memorandum & Articles of Association (MOA/AOA)
The two foundational constitutional documents of an Indian company, filed with the Registrar of Companies (RoC) at incorporation.
Funding Stages
The typical journey of startup capital — from the first cheque to late-stage mega-rounds — including what happens at each step and how investors evaluate you.
Pre-Seed
The earliest stage of startup funding, typically preceding a formal product launch.
Seed Funding
The first formal external funding round that a startup raises, typically after validating the problem and building an MVP.
Series A
The first major venture capital round, typically raised after a startup has demonstrated product-market fit with repeatable revenue, growing usage, or clear customer demand.
Series B
The second major VC round, focused on scaling a proven business model to the next level.
Series C and Beyond
Later-stage funding rounds for mature startups preparing for an IPO or large-scale market expansion.
Bridge Round
A short-term funding round raised between larger, priced rounds — typically when a startup needs additional capital to extend runway, hit specific milestones before a Series A or B, or bridge a seasonal cash-flow gap.
Down Round
A funding round in which the company's valuation is lower than in the previous round.
Grant Types
Different flavours of non-dilutive funding: government grants, CSR contributions, milestone-based programmes, and how they differ from debt or equity.
Grant
A sum of money given to a startup or organisation that does not need to be repaid and does not require giving up equity.
Non-Dilutive Funding
Any form of funding that does not require the founder to give up equity or ownership in the company.
CSR Funding
Corporate Social Responsibility funds — a portion of profits that Indian companies above certain revenue and profitability thresholds are legally required to spend on social impact under Section 135 of the Companies Act, 2013.
Milestone-Based Disbursement
A funding structure in which grant money is released in tranches as the startup achieves predefined milestones rather than as a single upfront payment.
Tranche
One portion or instalment of a larger funding amount that is disbursed in stages subject to the achievement of specific conditions or milestones.
Government Schemes & Bodies
Key Indian government ministries, departments, and schemes that run grant and funding programmes for startups — DPIIT, BIRAC, DST, MeitY, and more.
DPIIT Recognition
Registration with the Department for Promotion of Industry and Internal Trade that certifies an entity as a recognised startup under the Startup India initiative.
Startup India
A flagship Government of India initiative launched on January 16, 2016 by the Department for Promotion of Industry and Internal Trade (DPIIT) to build a strong ecosystem for nurturing innovation and startups in the country.
BIRAC
The Biotechnology Industry Research Assistance Council — a Government of India body under the Department of Biotechnology.
DST
The Department of Science and Technology — a Government of India ministry that funds deep-tech, science, and engineering startups through a portfolio of grant programmes.
MeitY
The Ministry of Electronics and Information Technology — a Government of India ministry that funds technology startups, with a particular focus on AI, cybersecurity, electronics, semiconductor design, and digital governance.
MoFPI
The Ministry of Food Processing Industries — a Government of India ministry that grants and subsidies for startups in food processing, cold chain logistics, agri-processing, and value-added food products.
NABARD
The National Bank for Agriculture and Rural Development — a development bank that funds startups and enterprises in agriculture, rural development, and allied sectors through a mix of grants, venture capital, and subsidised credit.
SISFS
The Startup India Seed Fund Scheme — a Government of India scheme administered by DPIIT with a corpus of ₹945 crore to provide seed funding to early-stage startups.
MSME / Udyam Registration
Registration under the Micro, Small & Medium Enterprises Development Act, now digitised as the Udyam Registration portal.
Investment & Equity
The mechanics of equity financing — valuations, dilution, convertible instruments, ESOPs, and the legal framework that governs startup investments.
Angel Investor
An individual who invests their own personal capital in early-stage startups in exchange for equity or convertible instruments.
Venture Capital (VC)
Institutional investment into high-growth startups in exchange for equity.
Equity
Ownership in a company represented by shares.
Dilution
The reduction in a founder's or existing shareholder's ownership percentage that occurs when a company issues new shares to investors, employees (via ESOPs), or other parties.
Convertible Note
A debt instrument that converts into equity at a future priced round, typically at a discount (usually 15–25%) to the next round's price and with a valuation cap that limits the price at which the note converts.
ESOP
Employee Stock Ownership Plan — a pool of shares (typically 10–20% of the company) set aside for employees, granting them the right to purchase company stock at a predetermined price (the strike price) after a vesting period.
Vesting
The schedule by which founders or employees earn their equity over time, typically measured in years of continued service.
Valuation
The estimated monetary worth of a startup, used to determine how much equity investors receive in exchange for their capital.
Term Sheet
A non-binding document that lays out the key terms and conditions of a proposed investment before the lawyers draft the full legal agreements.
Liquidation Preference
A right granted to preferred shareholders (investors) that determines the order and amount they're paid before common shareholders (founders and employees) in an exit — whether an acquisition, sale, or liquidation.
Anti-Dilution Protection
A contractual right that protects existing investors from having their ownership percentage and effective price-per-share devalued when a company raises a future round at a lower valuation than a previous round (a "down round").
Due Diligence
The investigation an investor conducts to verify a startup's claims and assess risk before finalising an investment, typically carried out after a term sheet is signed but before the definitive legal agreements close.
SAFE (Simple Agreement for Future Equity)
An investment instrument that gives an investor the right to receive equity in a future priced round, without being structured as debt — unlike a convertible note, a SAFE carries no interest rate and no maturity date.
Cap Table
A capitalization table — a spreadsheet or structured record showing who owns what percentage of a company, across every class of shareholder: founders, employees (via the ESOP pool), and investors (across each funding round).
Business Support
Organisations and programmes that help startups grow through mentorship, workspace, and structured growth programmes — accelerators, incubators, and bootstrapping.
Accelerator
A fixed-term, cohort-based programme (typically 8–16 weeks) that provides startups with mentorship, structured curriculum, networking opportunities, and funding — usually in exchange for 5–10% equity.
Incubator
An organisation that supports early-stage startups by providing workspace, mentorship, networking, administrative services, and sometimes funding — typically without a fixed time limit and without taking equity.
Bootstrap
Building and growing a startup using personal savings, revenue from early customers, or operational cash flow — without external investment.
Runway
The amount of time a startup can continue operating before it runs out of money, calculated as cash on hand divided by monthly burn rate (net cash outflow).
Legal & Regulatory
Laws, registrations, and compliance requirements that affect how startups raise and receive funding in India.
FCRA
The Foreign Contribution (Regulation) Act, 2010 — an Indian law that regulates the receipt of foreign funds by non-profit organisations, associations, and certain other entities.
Shareholders' Agreement (SHA)
A legally binding contract between a company's shareholders (founders and investors) that governs their relationship, rights, and obligations — separate from and in addition to the company's Articles of Association.
Memorandum & Articles of Association (MOA/AOA)
The two foundational constitutional documents of an Indian company, filed with the Registrar of Companies (RoC) at incorporation.
