Pro Forma

Pro Forma is generally a financial statement or cap table provided to investors that shows the company’s financial structure or capitalization structure if certain assumptions are accepted as true.


Private Company

A Private Company is a company whose shares are privately sold and owned and are not traded on a public market. Unlike public companies, private companies’ stock is often owned by a few shareholders.


Prepayment

Prepayment is the payment in full of an obligation before the maturity date of the obligation.


Preferred Stock

Preferred Stock is a type of equity security that is preferred or has preferences over the common stock, largely in terms of dividend payments and fixed payments upon a corporation’s liquidation.


Preferred Return

The Preferred Return is the amount of return the preferred shareholders will receive on the investment. If the preferred return is not met, there is said to be an overhang, and no other shareholders will receive a return.


Preemptive Rights

Preemptive Rights are given to shareholders, and before the company can issue additional shares, the company must give the shareholder the option to purchase the amount of newly issued shares that would maintain the shareholder’s percentage of ownership.


Pass Through Entity

A Pass Through Entity passes all income and losses it receives to the company’s owners or investors to be taxed at an individual level. Some examples of pass through entities are partnerships, sole proprietorships, limited liability partnerships, and limited liability […]


Partnership

A Partnership is created, without filing anything with the state, when two or more individuals go into business for profit. Partners are personally liable for all of the partnership’s debts and liabilities, but the partners receive the benefit of pass […]


Priced Round

A Priced Round (or Equity Round) is any round of financing in which investors receive a set amount of equity for an agreed upon price. Contrast with Convertible Debt Round.


Product/Market Fit

Product/Market Fit is a term used to describe when a product meets an existing need within a market. In the context of startups, a Product/Market Fit is often discussed as a necessary precondition to growth.