Glossary created by Funderbeam. Contributions from the Business Angel Institute and

Terms beginning with: P


The act of investors not getting involved in a particular investment opportunity presented to them. This does not imply that they don't like the idea. The decision may be due to the fact that they are focused on different deal sizes, industries, etc.

Please see Deal screening

Pay to play

A provision in venture capital where existing investors are forced to invest pro rata in a subsequent round. Non-compliant investors will be penalised. Normally, these provisions are used in next-round investments known as down rounds.


A concept popularised by the lean startup movement. It means that companies deliberately and substantially change their direction based on what they have learned in the past. Pivoting implies that startups make use of prior experience and apply the insight in new areas.


All current investments made by an investor.

Portfolio diversification

A risk-management technique that involves multiple investments in order to diversify the risk through a wide variety of assets, both in terms of quality and quantity. The rationale for diversification is to reduce non-systematic risk in a portfolio in order to cover the poor performance of some investments with the good performance of others.


The value of a company calculated after a funding round.


The value of a company calculated before a funding round.


Pre-revenue refers to the early phase of startups when they do not yet generate income because they are still developing their first products.

Private equity

Investment in a private company that is not listed on a stock exchange. The term is also often used to refer to later-stage transactions, as opposed to business angel or early venture-capital rounds. Related to: Financial exits

Pro rata rights

A right of investors to participate in future financing rounds, proportional to the investment they have already committed.

Product/market fit

Please see Validation

Proof of concept

Please see Stages

Public funding

Money provided to private companies by public institutions such as government agencies. Examples are government research grants and loans through economic development banks. Related: Incubators and Sidecar funds