Investor targeting is the process of identifying which venture firms and partners are the right fit for a round, done before any outreach happens. The work weighs the firm's stage focus, sector thesis, typical check size, recent portfolio investments, available capacity, and the individual partner's specific track record and known interests, tracked in a spreadsheet or CRM that runs the entire fundraise. It is the work that separates founders who pitch the right investors and close rounds from founders who pitch any willing investor and burn months getting filtered.
The firm-level criteria that matter: stage (seed funds invest at seed; growth funds don't invest at seed; targeting wrong-stage funds wastes everyone's time),...
An "AI wrapper" is the dismissive term for AI products that primarily call foundation model APIs and add minimal value beyond a UI on top. The critique: such products have no defensible moat because anyone can call the same OpenAI, Anthropic, or Google APIs. The label is applied (sometimes fairly, sometimes lazily) to a large fraction of post-ChatGPT AI startups. Whether the criticism is fair depends entirely on what the company has built beyond the API call.
The fair version of the critique:
A pure AI wrapper:
Common stock is the basic ownership share class of a corporation, held by founders, employees, and option-holders after exercise. It represents residual ownership in the company after all preferred-share rights are satisfied. In a venture-backed startup, common stock is junior to every series of preferred stock in liquidation waterfalls and typically carries fewer rights than preferred, though it carries the upside in exit scenarios above the preferred preference amounts.
The structural position of common stock in a venture-backed cap table: founders hold common from day one, employees receive options that exercise into common, advisors hold common (often via restricted stock or options), and early non-priced investors (SAFE an...
Burn rate is the monthly pace at which a startup spends cash, split into gross burn (total outflow) and net burn (outflow minus revenue). Founders and investors must keep these two measurements separate. Net burn is the number that determines runway and gets the most investor attention; gross burn is the number that determines how exposed the company is if revenue stops.
The two numbers, with examples:
| Company state | Monthly expenses | Monthly revenue collected | Gross burn | Net burn |
|---|---|---|---|---|
| Pre-revenue | $150K | $0 | $150K | $150K |
| Early revenue | $150K | $50K | $150K | $100K |
| Growth stage | $400K | $300K | $400K | $100K |
| Approaching cash-flow neutral | $500K | $480K | $500K | $20K |
| Cash-flow positive | $500K | $550K | $500K | -$50K (cash growing) |
Why both numbers matt...
An arbitration clause is a contract provision requiring that disputes between the parties be resolved through binding arbitration rather than court litigation. The clause typically specifies the arbitration provider (AAA, JAMS, ICC), the rules, location, arbitrator selection, class action waivers, and confidentiality terms. It has implications for cost, speed, privacy (arbitration is private; court is public record), appeal rights (extremely limited in arbitration), and discovery scope (typically more limited than court). Arbitration clauses are increasingly common in commercial contracts, employment agreements, and consumer terms of service. It's the contract provision that determines whether disputes go to court or to a...
Generative AI is the category of AI systems that create new content (text, images, code, audio, video, 3D) rather than classifying or analyzing existing data. The November 2022 release of ChatGPT marked the cultural and commercial inflection point that transformed generative AI from research curiosity to mainstream technology used by hundreds of millions of people within months. It's the category of AI that produces output rather than just labels or predictions.
The pre-ChatGPT history (compressed):
2014: Generative Adversarial Networks (GANs) introduced. First major generative image breakthrough.
2017: Google's "Attention is All You Need" paper introduces the Transformer architecture (the foundation for modern LLMs).
2018: Op...
Demo day is the event ending an accelerator program where each startup pitches a large invited audience of investors in 2 to 6 minutes. The audience also includes press, partners, and ecosystem players, and the pitch is designed to drive follow-up meetings and term sheets within the days and weeks after the event. It is the marquee fundraising moment for accelerator cohorts and has become a meaningful slice of the early-stage venture funding rhythm, often serving as the early-stage alternative to a traditional [Roadshow].
The format and major examples: Y Combinator demo day (the canonical version, originated 2005, now hosts the largest invited investor audiences for any accelerator; YC demo days have moved between in-person and rem...
The Jumpstart Our Business Startups (JOBS) Act is bipartisan US legislation signed into law in April 2012 that liberalized US securities regulations for smaller companies. It had three major impacts on startup fundraising: (1) creating the framework for equity crowdfunding under Regulation CF (operationalized 2016), (2) expanding Regulation A from a rarely-used $5M cap into Reg A+ with a $50M cap (later raised to $75M), and (3) creating the Emerging Growth Company (EGC) category that simplified IPO disclosure requirements for companies under $1.235 billion (2024 threshold) in revenue. It is the most significant securities-law reform affecting startup capital access in decades.
The three major changes:
Restricted stock is an outright grant of common stock subject to vesting and company repurchase rights for unvested shares. Used primarily for founders and very early employees in C-corp startups, the recipient owns the shares from grant date, can file an 83(b) election to lock in tax treatment at the near-zero grant-date value, and starts the long-term capital-gains holding clock immediately. It is structurally different from stock options (which are rights-to-buy, not ownership) and from RSUs (which are promises to deliver shares in the future).
The mechanic of a restricted stock award:
A scale-up is a company that has achieved product-market fit and entered the growth and scaling phase, typically 50-500 employees with predictable revenue growth. It is characterized by annual revenue growth rates of 20%+ year-over-year (often 40-100% for high-performers), maturing functional organization with department heads running their domains (VP Engineering, VP Sales, VP Marketing rather than founders running everything), Series B and later funding stages, and operational focus on scaling a proven model rather than discovering one. It is the structural phase between early-stage startup and mature company, with distinctly different operating dynamics from either.
The defining characteristics of scale-ups: