Raising money comes with its own vocabulary. This glossary explains the terms you will meet in pitch meetings, term sheets and funding news, in plain English. It is part of the Propel Guide to Raising in Africa, and every chapter links back here.
Stages
Pre-seed. The first outside money in a company, usually to prove an idea or build a first version. In Africa the typical pre-seed round is now about $800,000. See chapter 1.
Seed. Money to find product-market fit: proof that customers want the product and will pay for it. The typical African seed round is now about $2.5 million.
Pre-Series A. A bridge round between seed and Series A, often raised when growth is strong but not yet at Series A level.
Series A, B, C. Successive priced rounds as a company grows. Series A builds a repeatable business, Series B scales it, Series C and later fund expansion, new markets or acquisitions.
Extension. Extra money added to a round that has already closed, usually on the same terms, for example a "seed extension".
Bridge round. A short-term raise to carry a company to its next main round.
Venture round. A round announced without a stage label. It is the most common label in African funding news.
Growth round. A late-stage raise for a company with substantial revenue, often from growth funds or private equity.
Instruments
Equity. Money given in exchange for shares, so the investor owns part of the company.
Grant. Money that does not need to be repaid and does not buy shares, typically from foundations, governments or competitions.
Debt. A loan that must be repaid with interest. Investors do not get shares, unless the loan is convertible.
Venture debt. Loans for startups that have raised venture capital, often used to extend runway or fund assets.
Revenue-based financing. Funding repaid as a share of future revenue until an agreed amount is reached.
Mezzanine. A mix of debt and equity features, for example a loan that can convert into shares. It sits between senior debt and equity in priority.
Convertible note. A loan that converts into shares at the next priced round, usually at a discount.
SAFE (simple agreement for future equity). An agreement that gives an investor the right to shares at a future priced round. Unlike a convertible note it is not a loan and carries no interest.
Priced round. A round in which investors and founders agree a valuation, and investors buy shares at a set price per share.
Securitisation. Bundling income streams, such as customer loan repayments, and selling them to investors. It is common among solar, mobility and lending companies.
Bond. A tradable loan issued to investors, sometimes listed on an exchange.
Secondary sale. When existing shareholders sell their shares to new investors. The company itself receives no new money.
Valuation and ownership
Valuation. What a company is agreed to be worth in a funding round.
Pre-money valuation. The value of the company before the new investment.
Post-money valuation. The value after the investment: pre-money plus the new money.
Dilution. The reduction in existing shareholders' percentage ownership when new shares are issued.
Cap table (capitalisation table). A table showing who owns what share of the company.
Option pool (ESOP). Shares set aside to reward employees, usually created or topped up before a round.
Down round. A round at a lower valuation than the previous one.
Unicorn. A private company valued at $1 billion or more.
Valuation cap. The maximum valuation at which a SAFE or convertible note converts into shares.
Discount. A reduction on the share price that note or SAFE holders receive when they convert.
Term sheet and deal terms
Term sheet. A short document setting out the main terms of an investment before the legal documents are drafted. Usually not binding, apart from clauses such as confidentiality.
Lead investor. The investor who sets the terms of a round and usually puts in the largest amount.
Co-lead. Two or more investors who lead a round together.
Follow-on. An existing investor putting more money into a later round.
Pro rata right. An investor's right to invest in future rounds to keep their percentage ownership.
Liquidation preference. The order and amount in which investors are paid back if the company is sold or wound up.
Anti-dilution. A clause protecting investors if shares are later sold at a lower price.
Board seat. A position on the company's board, often given to a lead investor.
Vesting. The process by which founders and employees earn their shares over time, often over four years.
Cliff. A period, often one year, before any shares vest.
Due diligence. The investor's checks on a company's finances, legal position, team and market before investing.
Drag-along and tag-along. Clauses that let majority shareholders require others to join a sale (drag), or let minority shareholders join one (tag).
Investors
Angel investor. An individual who invests their own money, usually at pre-seed or seed.
Angel network. A group of angels who review and invest in deals together.
Accelerator. A programme that gives startups mentoring and often a small investment in exchange for equity, for a fixed period.
Incubator. A programme that supports very early companies, usually for longer and often without taking equity.
Venture capital (VC) firm. A firm that raises money from investors and invests it in startups for equity, aiming for large returns.
Corporate venture capital (CVC). The investment arm of a corporation.
Development finance institution (DFI). A government-backed institution that invests in private companies in emerging markets, such as IFC, British International Investment, Proparco or FMO.
Impact investor. An investor who seeks social or environmental impact alongside financial return.
Family office. A firm that manages and invests a wealthy family's money.
Sovereign wealth fund. A state-owned investment fund.
Limited partner (LP). An investor in a venture fund, such as a pension fund, DFI or family office.
General partner (GP). The people who run a venture fund and make its investment decisions.
Crowdfunding. Raising small amounts from many people, usually through an online platform.
The 2026 vocabulary
Non-dilutive capital. Money that does not cost founders any ownership, such as grants, debt and revenue-based financing.
Senior debt. A loan that is repaid first if things go wrong, ahead of other lenders and shareholders.
Structured credit. Debt arranged in layers or backed by specific assets or income, rather than a simple loan to the company.
Asset-backed financing. Lending secured against assets the company owns or finances, such as motorbikes, solar systems or customer loans.
Receivables financing. Borrowing against money customers already owe the company.
Local-currency debt. A loan in naira, shillings or rand rather than dollars, which protects a company from currency swings.
Blended finance. Deals that mix public or philanthropic money with private money, so that riskier investments become possible.
Cornerstone investor. An early, committed investor whose backing helps bring others into a round or fund.
Angel syndicate. A group of angels who invest together through one vehicle, usually led by one experienced angel.
SPV (special purpose vehicle). A company set up to pool several investors into a single line on the cap table.
Party round. A round with many small investors and no clear lead.
Flat round. A round at the same valuation as the last one.
Structured round. A round with extra investor protections, such as larger liquidation preferences, often used to avoid a down round.
Emerging manager. A fund manager raising one of their first funds. A solo GP is an emerging manager running a fund alone.
Secondaries. Buying and selling existing shares in private companies, giving early investors or staff a way to cash out before an exit.
Continuation fund. A new vehicle that lets a fund keep holding its best companies beyond the original fund's life.
Flip. Moving a company's holding structure abroad, often to Delaware, the UK or Mauritius, usually to suit foreign investors.
Reverse flip. Moving the holding company back to its home country, for example to list locally or meet local rules.
Missing middle. Companies too big for micro-loans and early grants but too small for large investors, or rounds of roughly $1 million to $5 million that are hard to fill.
Barbell market. A market where money concentrates at both ends, in very early and very large deals, with less in between.
DFI shift to debt. Development finance institutions providing more loans, guarantees and mezzanine facilities rather than equity.
PAYGo (pay-as-you-go). Letting customers pay for a product such as a solar kit or a phone in small instalments, often by mobile money.
Battery-as-a-service. Leasing batteries separately from electric vehicles, so riders swap a flat battery for a charged one and pay per use.
Embedded finance. Financial services such as payments, loans or insurance built into a non-financial product, for example credit inside a retail app.
Stablecoin. A digital token pegged to a currency, usually the US dollar, used increasingly for cross-border payments and savings in Africa.
Crypto-native investor. An investor whose capital comes from crypto markets rather than traditional venture funds.
AI-native. A company built around artificial intelligence from the start, rather than one that adds AI to an existing product.
The business side
Runway. How many months a company can operate before it runs out of cash.
Burn rate. How much cash a company spends each month.
Product-market fit. The point where a product clearly meets strong demand from a defined market.
Traction. Evidence of progress, such as revenue, users or growth.
Unit economics. The revenue and costs tied to a single customer or sale.
ARR and MRR. Annual recurring revenue and monthly recurring revenue.
Exit. When investors sell their stake, for example through an acquisition or a stock market listing.
IPO (initial public offering). When a company first lists its shares on a stock exchange.
Acquisition. When one company buys another.
Part of the Propel Guide to Raising in Africa. Start with chapter 1, the funding ladder.