Deal Lead

The term ‘deal lead’ refers to the investor or fund who leads the funding round of a startup and sets the terms on which the investment will happen.

Debt Consolidation

Debt consolidation is the process of taking out one loan to pay off some portion of all the other loans that a company has. The new loan typically has more friendly repayment terms.

Debt Financing

The term ‘debt financing’ refers to any financial product that involves the exchange of capital for a debt instrument, such as a loan, or convertible note.

Debt-to-Equity Ratio

The term ‘debt-to-equity’ refers to the relative ratio of a company’s liabilities to its shareholder equity—it is used to evaluate how much leverage a company is accessing. Company’s with a high debt-to-equity ratio carry a higher risk to shareholders.


The term ‘debtor’ refers to a company that is in debt to another company due to a financial arrangement, such as a loan or convertible debt product.

Default (Financial)

A loan is considered “in financial default” when it cannot reasonably be expected to be paid back, or when only the interest can be paid back (i.e. interest-only payments).

Default (Technical)

A loan is considered to be in a “technical default” when there is a failure to uphold an aspect of the loan terms (other than the regularly scheduled payments).


The term ‘depreciation’ refers to the relative drop in an asset’s value, due to its decreasing useful life over time. There are four main forms of depreciation—straight-line, declining balance, sum-of-the-years’ digits, and units of production.


Dilution refers to the process of decreasing existing shareholders relative ownership in the company, through the issuance of new shares in said company or through the conversion of options.

Early investors typically try to prevent the dilution of their shares by establishing provisions in their term sheets including: full or partial ratchets.

Dilutive Financing

The term ‘dilutive financing’ refers to any form of fundraising where capital is exchanged for equity in the business.

Direct Lender

The term ‘direct lender’ refers to a financier that provides the actual capital for a loan without an intermediary. By eliminating intermediaries, direct lenders are able to offer more competitive interest rates on their debt products.

Dirty Term Sheets

Dirty term sheets, also known as predatory term sheets, are used to describe term sheets that are riddled with one-sided provisions and terms that are not in the founders’ favor. They are often deployed when a startup wants to raise capital while maintaining its inflated valuation and are based on internal rate of return mechanics other than price such as—price in kind dividends, or guaranteed multiple hurdles. Dirty term sheets misalign the interests of investors and operators, as investors focus their efforts solely on pushing the startup to go public. AVOID dirty term sheets at all costs.


A disbursement is exactly the same as a dividend except that the term “dividend” is used for companies that are established as C Corporations, and the term “disbursements” is used to describe cash payments from S Corporations and mutual funds.

Disclosure Schedule

A disclosure schedule outlines all of the fact-specific disclosures (or exceptions to specific statements) relating to the seller’s representations and warranties. There are two types of disclosures—affirmative disclosures and negative disclosures. Negative disclosures list the exceptions or qualifiers to the seller’s responsibilities and warranties, whereas affirmative disclosures list the actual requirements.

Discount Rate

The discount rate refers to the percentage used to discount a company’s future cash flow to its equivalent present value. The typical discount rate for SaaS startups is 20%, but it can be upwards of 40% in certain situations.


A company disrupts another when it introduces a competing product at a more attractive price, with a better interface or feature set, or with unique positioning. Typically established legacy companies are disrupted by new startups, but they are sometimes disrupted by other legacy companies.

Recent examples of companies with disruptive business models include: Airbnb (disrupting hotels), Uber (disrupting taxi cabs), Doordash (disrupting food delivery).


A dividend is a payment made by a company to its investors and shareholders—it’s typically paid out quarterly.

Double Entry Accounting

The double entry accounting system is a form of accounting that requires two entries for every transaction.

Down Round

The double entry accounting system is a form of accounting that requires two entries for every transaction.


Drag-Along Rights

The term ‘drag along rights’ refers to the ability of majority shareholders to force minority shareholders to join in the sale of a company at the same price, terms, and conditions as they received. If applicable, the drag along rights will be detailed in the provisions of the term sheet.

Draw Down

Startups draw down their loans or credit lines when they access the capital that their lenders provide. Typically, startups shouldn’t draw down more than 50% of the loan amount to ensure they don’t surpass the ideal loan to value ratio.

Due Diligence

The term ‘due diligence’ refers to the investigation process that takes place when investors are evaluating potential opportunities, or when a company is considering entering into a contract with another entity. Like the duty of care, the due diligence process centers around the research that a reasonable person would be expected to conduct.

Duty of Care

The term ‘duty of care’ refers to the responsibility of the directors and officers of a company to conduct a reasonable amount of diligence prior to making a decision in good faith that aligns with the best interests of the company. The decision they make must also align with the decision that a prudent person would reasonably be expected to take in a similar position and under similar circumstances.

Duty Of Loyalty

The term ‘duty of loyalty’ refers to the responsibility of all directors and officers of a company to act at all times in the best interest of the company, without personal conflicts of interest. One such example is the requirement to keep all company information confidential, and to not misuse or disclose such information.