The nicknames, neighborhoods, and terms that come up constantly, from what “The Gundo” means to what actually happens when your SAFE converts.
The neighborhoods and nicknames you'll hear on repeat once you're actually in the scene.
El Segundo's nickname, and if you're building anything with hardware in LA, you'll hear it constantly. It used to be cheap warehouse space next to LAX, then SpaceX moved in, and a wave of ex-SpaceX engineers started spinning out their own companies a few blocks away. Low rent, huge floor plates for building physical stuff, and a talent pool that never had to leave the neighborhood.
SpaceX is the anchor, but the real story is everything that grew up around it: a whole cluster of aerospace and defense startups that picked the South Bay over the westside's more consumer-software scene.
LA's westside tech corridor: Santa Monica, Venice, Playa Vista, a bit of Marina del Rey. It became a real startup hub once entertainment and tech started blending together in the 2010s: beach lifestyle, ad agencies and studios down the street, and enough VC money finally showing up to make it stick. Google taking over Howard Hughes' old aircraft hangar in Playa Vista is the moment people usually point to.
Where The Gundo is hardware and defense, Silicon Beach is consumer apps, media tech, e-commerce, and adtech, the stuff you'd expect to find near Venice.
San Diego's answer to Silicon Beach: its biotech cluster, centered on the Torrey Pines mesa right next to UC San Diego, the Salk Institute, and Scripps Research. Decades of academic labs spinning out into real companies, plus lab space that's cheaper than the Bay Area, built one of the biggest biotech scenes in the country outside Boston and Northern California.
If you're building biotech anywhere in Southern California, San Diego is usually where the specialized investors and lab-trained talent already are.
The stretch of LA's South Bay, El Segundo, Hawthorne, Torrance, Redondo Beach, that's been building airplanes since World War II. Douglas Aircraft, Northrop, and Hughes Aircraft all had major plants here, and that history isn't just trivia. It's a big reason SpaceX picked Hawthorne, and why the newer wave of space and defense startups didn't have to start from scratch.
A lot of the engineers leading today's startups came up through the old aerospace primes first. The corridor connects the two eras more directly than people realize.
Downtown LA's smaller, quieter startup cluster: less about consumer brands, more fintech, media, and B2B software. It's grown alongside downtown's broader comeback over the last 15 years or so.
Founders here usually want LA's talent without paying westside rent or competing with ad agencies for office space.
Orange County's startup scene, centered in Irvine and fed by UC Irvine's research pipeline. It skews enterprise software, biotech, and medical devices: less flashy than LA's consumer startups, more capital-efficient office park.
OC doesn't get the press LA or San Diego does, mostly because B2B companies don't make for great headlines the way a DTC brand or a rocket company does.
A rallying hashtag for being bullish on Southern California as a startup hub, in the spirit of a stock ticker: you're "long" on the region's future. Investors like Upfront Ventures' Mark Suster and Greg Bettinelli (a Partner at Upfront when he wrote the original "Who is #LongLA?" post cataloguing the region's investors, now at The Chernin Group) helped popularize it as a counterweight to LA getting dismissed next to the Bay Area. #LongSoCal is the newer, region-wide version, extending the same bet to San Diego, Orange County, and the Inland Empire alongside LA.
Shows up on LinkedIn posts, pitch decks, and event recaps as shorthand for "I'm building here, not moving to SF" — used by everyone from solo founders to institutions like LACI.
The words that come up specifically because of what SoCal builds: space, defense, and hardware.
Shorthand for the modern, venture-backed space industry, SpaceX, Rocket Lab, Relativity, Vast, building rockets and satellites as actual businesses instead of relying purely on government contracts. It's the opposite of "Old Space," the legacy primes like Boeing, Lockheed, and Northrop that grew up almost entirely off government money.
Southern California, especially the South Bay, is basically ground zero for New Space in the US. SpaceX's gravity pulls almost everything else along with it.
Tech built to work for both commercial customers and the military, the framing a lot of SoCal defense startups lean on now that Silicon Valley VCs are finally willing to fund defense again. Calling yourself "dual-use" widens who can buy your product and makes investors who used to avoid pure defense plays more comfortable writing the check.
This framing basically grew up around The Gundo. Most of the highest-profile companies using it are headquartered there or nearby.
Startups building actual physical things: rockets, robots, batteries, chips, factories, instead of pure software. It takes more money, more time, and more specialized engineers than a typical app, but SoCal's aerospace roots and manufacturing base make it a natural home for this kind of company.
This is probably the biggest way SoCal's startup scene differs from Silicon Valley's software-first history.
Every term that shows up the second money enters the conversation.
The very first money a startup raises, usually before there's real revenue, or even a finished product. It's meant to buy enough time to build an MVP and hire a few people so you can go raise a real seed round. Checks are small, and usually come from angels, friends and family, or funds that specialize in writing the first check.
The first serious round of venture funding, raised once you've got something to point to: early users, some traction, an early product. Seed money funds the work of finding product-market fit, with the goal of raising a Series A once you can actually prove the thing works.
The rounds that follow seed, each bigger than the last and tied to a different milestone. Series A usually funds scaling a product that's already working; Series B funds pushing into new markets; Series C and beyond fund the push toward profitability or an exit. Every round comes with a new valuation, new investors leading it, and usually a new board seat.
A financing document Y Combinator invented in 2013 that lets a startup take money now and give equity later. It converts into shares once you raise a priced round, without anyone having to agree on a valuation up front. It's faster and cheaper than a full equity round, which is why it's basically the default for pre-seed and seed money now.
The SAFE's older sibling: same basic idea, raise now, convert to equity later, but structured as debt instead. It accrues interest, has a maturity date, and gets paid back if the company never raises again. Some investors still prefer it because it comes with debt-like protections a SAFE doesn't have.
The document that lays out the proposed terms of a deal, valuation, how much you're raising, investor rights, board seats, before the lawyers turn it into real legal paperwork. It's not technically binding, but signing one is both sides saying "we're serious about doing this."
The record of who owns what percentage of your company: founders, employees with equity, every investor from every round. It sounds boring until it's messy, at which point it can genuinely tank a fundraise or an acquisition. Keep it clean from day one.
What happens to your ownership percentage every time the company issues new shares, whether that's a new funding round or a new employee's equity grant. You're always trading dilution for something, capital or talent, which is exactly why round size and valuation are worth fighting for.
A clause in almost every VC round saying investors get paid back before common shareholders, including founders, if the company gets sold or shut down. Usually it's just their money back, sometimes with a multiple on top, before anyone else sees a dollar. This matters most in a modest exit, where there might not be enough left over for everyone to get their full share.
An investor's right to put more money into your next round so their ownership percentage doesn't shrink. It's usually negotiated into early checks, and it's a pretty common source of tension: investors want to protect their stake, founders want flexibility on who's in the next round.
A bridge round is smaller, faster money raised between two real priced rounds, usually just to buy time until you hit a milestone worth raising a bigger round for. A down round is a priced round at a lower valuation than your last one, which dilutes everyone more and can trigger protections for earlier investors. Both show up more often when fundraising markets get tight.
An independent appraisal of what your common stock is actually worth, required by the IRS, that sets the price employees pay to exercise their stock options. You need a fresh one after every priced round, and periodically otherwise. Skip it, and employees can end up with a surprise tax bill.
A federal tax rule, Section 1202, if you want to sound smart about it, that lets founders and early investors in eligible C-corps skip capital gains tax on some or all of their shares when they sell, as long as they've held the stock at least five years and the company qualifies. It's one of the biggest, most overlooked breaks in startup tax planning. Worth understanding before you incorporate, not after you exit.
An individual investing their own money, often at pre-seed or seed, sometimes with advice and introductions attached. Checks usually run from tens of thousands of dollars up to a few hundred thousand. Angels tend to move faster than funds, but what they bring beyond the check varies a lot, so ask.
Firms that raise money from outside investors, called limited partners, and invest it in high-growth startups in exchange for equity. Because a fund needs a few big winners to pay off, VCs look for companies that could plausibly become very large, which isn't the right fit for every good business. Knowing that model helps you decide whether their money suits what you're building.
Money raised by a company that already has traction, usually to expand into new markets or products, typically from later-stage VCs or growth equity funds. It tends to buy a minority stake rather than control, and investors expect real revenue and metrics to back it up.
A loan for a startup that has already raised equity, often used to stretch runway between rounds without selling more ownership. Lenders lean on the backing of existing investors instead of profits, and often take warrants too. It can help, but repayment is required whether or not the next round comes together.
Raising smaller amounts from many people online. Under the SEC's Regulation Crowdfunding, a company can raise up to $5 million in a year from the general public through a registered platform. It can double as marketing to your customers, but you take on many small shareholders and ongoing disclosure obligations.
A syndicate is a group of investors pooling money to back one company, usually organized by a lead who brings the deal. The vehicle they invest through is often an SPV (special purpose vehicle), a single-purpose entity that shows up on your cap table as one line instead of dozens of small investors. It keeps the cap table cleaner, but confirm what rights and terms the SPV carries.
When existing shareholders, like founders or early employees, sell some of their shares to a new investor. The company issues nothing new and receives no money. Secondaries mostly happen in later rounds and are sometimes used to give founders a partial payout, though investors often want to cap how much founders sell.
The investor who sets the terms and usually writes the biggest check in a round, with the others following on the same terms. Landing a lead often unlocks the rest of the round, which is why raises tend to stall until someone steps into that role. They typically run the negotiation and often take a board seat.
The stuff that matters after the fundraise: product, growth, and how equity actually works.
The smallest version of your product that actually tests whether anyone wants it, on purpose, missing everything that isn't essential. The point isn't to ship something impressive, it's to answer the real question fast, without burning months and cash you don't have yet.
The moment your product actually satisfies real demand. You'll know it by organic growth, people sticking around, and customers who'd genuinely be upset if you disappeared, more than any single number. Almost nothing else matters until you find it. Fundraising, hiring, scaling, none of it works without this first.
How much time you have left before the money runs out: cash on hand divided by monthly burn. It's the number that decides how much time you actually have to hit your next milestone before you're forced to raise again, or worse.
How much cash you're spending each month beyond what's coming in. Track both gross burn (total spend) and net burn (spend minus revenue). Net burn is the one that actually tells you how long you've got.
Annual and Monthly Recurring Revenue, the standard way to measure the predictable, subscription part of your revenue. Investors care about these numbers a lot more than one-time sales, because recurring revenue is a much better predictor of what next year actually looks like.
Total, Serviceable, and Serviceable Obtainable Market, a way of sizing your opportunity from "everyone who could theoretically buy this" down to "what we can actually realistically capture." Investors ask for this breakdown to sanity-check whether your ambition matches a market big enough to justify a venture-scale bet.
Vesting is the schedule you earn your equity on, usually four years. The cliff is the minimum time, typically one year, before any of it vests at all, so the company isn't stuck giving real equity to someone who leaves after two months.
The chunk of equity a company sets aside specifically for employees, current and future. Investors usually make you carve this out, or grow it, right before a priced round closes, and it dilutes existing shareholders, usually the founders, not the new investors.
Bootstrapped means growing off your own revenue, savings, or debt: slower, but you keep full ownership and control. Venture-backed means trading equity for outside capital to grow faster, usually chasing an outcome big enough to justify the risk investors took. Same goal, very different incentives along the way.
An accelerator, think Y Combinator or Techstars, is a fixed-length cohort program that gives you a bit of funding, mentorship, and a demo day, for equity, usually over about three months. An incubator is looser and longer, sometimes with no funding or equity attached, meant for ideas that aren't ready to raise real money yet.
A company still operating out of public view, no website content, no launch, sometimes not even a real name yet, usually while building the actual product, locking in early funding, or protecting a competitive edge before showing the market anything. It's common enough in the hardware and defense-heavy corners of SoCal that seeing "Stealth Startup" listed as someone's employer on LinkedIn barely raises an eyebrow anymore.
Y Combinator tags every cohort with a season and year, W26 for Winter 2026, S26 for Summer 2026, and founders use it constantly as shorthand for when they went through the program. It also doubles as a rough age check: investors and founders both use batch codes to gauge how established a company is.
The right to buy company shares at a fixed price, usually granted to employees. Incentive stock options (ISOs) can get favorable tax treatment but only go to employees and have annual limits; non-qualified options (NSOs) are more flexible but the gain is taxed as ordinary income when exercised. The strike price is set from a 409A valuation, and the exercise window after someone leaves the company matters more than most people realize.
A filing with the IRS that lets you pay tax on restricted stock when you receive it instead of as it vests. Founders with early stock usually file while the shares are worth almost nothing, which can avoid a much larger tax bill later as the company grows. The deadline is 30 days from the grant and can't be extended, so this is one to handle right away, ideally with a tax professional.
Prioritizing speed of growth over efficiency, spending heavily to capture a market before anyone else does. Coined by Reid Hoffman, it's meant for winner-take-most markets where being second is costly. For most startups it's the wrong playbook, and it depends on investors willing to fund losses for a long time.
A loop where each part of the business feeds the next, so growth builds momentum. The classic example is Amazon's: lower prices bring more customers, more customers attract more sellers, more sellers widen selection, and scale lowers costs, which allows lower prices. Investors like a flywheel because it suggests growth gets cheaper over time.
A durable advantage that keeps competitors from copying your success. Common ones are network effects, high switching costs, scale, brand, and proprietary technology or data. Investors ask about moats because a good idea alone is easy to copy, so be ready to say specifically why yours will still hold in three years.
When a product gets more valuable as more people use it. Direct network effects are the social network kind, where every new user makes it better for the rest. Indirect ones come from marketplaces, where more buyers draw in more sellers and the other way around. They're among the strongest moats and the hardest to get started, since the product is thin until enough people show up.
The danger of building a business on someone else's platform, like an app store, a marketplace, or a social network. The owner can change fees, rules, or access with little warning, and that can end a business overnight. Investors will ask how dependent you are and what you'd do if the platform changed its terms.
The pattern that makes venture math work: a small share of investments generate most of a fund's returns, and one big winner can return the whole fund. It's why VCs pass on companies that look good but capped, and why they're comfortable with many failures. Understanding it explains a lot of investor behavior that otherwise seems irrational.
Markets where one or two companies capture nearly all the value, typically because of network effects or big scale advantages. They justify aggressive spending on growth, since second place is worth far less. Not every market works this way, so be careful about using the label to justify burning cash.
A private company valued at $1 billion or more. Investor Aileen Lee coined the term in 2013 when such companies were rare; there are now well over a thousand worldwide, so it's more a milestone than a mark of rarity.
The clauses that decide who gets paid, who gets a say, and who takes the hit once a round closes.
A clause that protects an investor if the company later raises money at a lower price per share than they paid. The common version, broad-based weighted average, adjusts the investor's conversion price part of the way toward the new lower price, so founders take a modest hit. It only kicks in on a down round, which is why founders rarely think about it until things have already gone sideways.
The harshest form of anti-dilution: if a later round prices lower, the earlier investor's price resets all the way down to the new price, as if they had bought in at the lower valuation from the start. It's uncommon in venture deals because it can take a big bite out of founder ownership in a down round. If a term sheet includes one, it's worth negotiating hard.
A right, usually held by the majority of shareholders, to force everyone else to join a sale of the company on the same terms. Buyers want it because they typically want 100% of the company and one holdout could block the deal. Founders should check who holds the right and what thresholds must be met before it can be used.
The flip side of drag-along: if a major shareholder, often a founder, sells their shares, minority investors can sell alongside them on the same terms. It keeps investors from being left behind when the people running the company cash out. It's usually paired with a right of first refusal, which gives the company or investors first crack at buying shares a holder wants to sell.
What the company is valued at before the new money from a round goes in. If you're valued at $8M pre-money and raise $2M, you're $10M post-money and the new investors own 20%. Option pool increases are often built into the pre-money number, which is why the headline valuation and what founders actually keep can be different.
The pre-money valuation plus the new capital raised. Investors use it to work out their ownership: their check divided by the post-money. Post-money SAFEs use it to make the investor's percentage easy to calculate up front, though founders absorb the dilution from all the SAFEs.
Both let investors get their money back first in a sale. Non-participating investors then pick the bigger of that payout or converting to common. Participating investors take the payout and also share in what's left, a double dip that costs founders real money in moderate exits. Non-participating is the more common standard in venture rounds.
Founders and employees generally hold common stock. Investors in a venture round get preferred stock, which carries extras: a liquidation preference, anti-dilution protection, and often special voting rights. Preferred can convert into common, which usually happens at an IPO or in a sale where converting pays more than the preference.
A provision, mostly seen in down rounds, that makes existing investors put more money into the new round to keep their special rights. Investors who sit it out can have their preferred shares converted to common, losing the protections. It's meant to keep the whole investor group committed instead of letting some ride on rights they aren't funding.
The contractual right for investors to receive regular financials and updates from the company, often quarterly or annual statements and a yearly budget. Larger investors usually get them and smaller ones sometimes don't. It's worth sending updates even when you aren't required to, since investors talk to each other.
A list of company decisions that need investor approval even though the investors don't control the board, such as selling the company, issuing new stock that ranks above theirs, or changing the charter. They let minority investors block the moves that would hurt them most. Read the list carefully, because a long one can quietly limit how freely you run the business.
Who decides what comes down to two layers: shareholder votes, which elect the board and approve big changes, and board votes. Some companies use dual-class shares so founders keep extra votes as they raise money. Early on, the practical question is who controls the board, because that's who can hire and fire the CEO.
A board seat gives an investor a vote on the company's biggest decisions. An observer can sit in the meetings and see the materials but doesn't vote. Early boards tend to be small, commonly the founders plus one investor, so who gets a seat is a real negotiating point.
A right to buy shares at a fixed price for a set period, often handed to a lender alongside venture debt as a sweetener. It costs the company nothing today but adds a little potential dilution later. Unlike stock options, warrants usually go to investors and lenders rather than employees.
An SEC category for people allowed to invest in private companies without the protections of a public offering. The usual tests are income above $200,000 a year ($300,000 with a spouse) for the last two years, or a net worth above $1 million not counting your primary home. Certain professional licenses also qualify. Most startup rounds are limited to accredited investors, so the definition matters when you're deciding who you can take money from.
The SEC exemption most startup rounds rely on to sell stock without registering it publicly. Under Rule 506(b) you can't advertise the raise and can take a limited number of non-accredited investors. Under 506(c) you can advertise openly, but every buyer must be accredited and you have to verify it. Companies file a short Form D after the first sale.
Ownership earned through work instead of cash, like a co-founder who puts in the hours while another puts in the money. It's real value, but it needs to be written down: vesting, what happens if someone leaves, and how the split was decided. Vague sweat equity arrangements are a classic source of early co-founder fights.
How founders and investors turn their ownership into cash: usually an acquisition or an IPO, occasionally a sale of shares to another investor. Acquisitions are far more common than IPOs. Investors plan around the exit from day one, so it's worth asking early what kind of outcome they need.
The first time a company sells its shares on a public stock exchange. It gives investors and employees a way to sell, but it also brings public-company reporting and scrutiny, plus lockup periods that typically stop insiders from selling for around six months after listing.
Part of an acquisition price that's only paid if the company hits agreed targets after the sale, like revenue or product milestones. It helps buyer and seller bridge a disagreement about valuation. For the founder it's a risk, because the targets can be affected by decisions the new owner makes, so the details matter more than the headline number.
The investigation an investor or buyer runs before closing: financials, contracts, the cap table, intellectual property, legal issues, and customer references. Clean records make it go faster. A tidy cap table and organized documents before you start raising is one of the cheapest ways to keep a deal from stalling.
An agreement that keeps shared information confidential. They're routine during due diligence or when sharing sensitive details with a partner, but many VCs won't sign one just to hear a pitch, so don't count on one for early investor conversations.
Statements of fact you make in a deal, like that you own your IP or that the financials are accurate. If one turns out to be false, the other side can claim compensation, often through an indemnity clause or a holdback from the sale price. They matter most when you're selling the company, so disclose known problems up front instead of hoping they don't surface.
The numbers investors ask about, and what each one is actually measuring.
Total sales and marketing spend divided by the number of new customers won in the same period. Blended CAC can hide a lot, so split it by channel: cheap organic customers can mask expensive paid ones. Investors compare it against what a customer is worth over time.
How many months of a customer's gross profit it takes to earn back what you spent to acquire them. Shorter is better. Many SaaS investors get comfortable somewhere around 12 to 18 months, though the right number depends on your stage and margins.
An estimate of the total gross profit an average customer brings over the life of the relationship. Divide it by CAC and you get the LTV:CAC ratio, where investors commonly look for at least 3 to 1. LTV is a projection, especially for young companies, so be ready to show how you calculated it.
The share of customers or revenue you lose over a period. Logo churn counts the customers who leave; revenue churn measures the dollars, which can look better if your bigger customers stay or expand. If expansion from existing customers outweighs what's lost, you have negative net churn, a very good sign.
How much revenue you keep and grow from a group of existing customers after counting upgrades, downgrades, and cancellations. Over 100% means the group spends more over time even with no new customers. Investors focus on it because it shows whether the product gets more valuable to people who already use it.
Revenue minus the direct cost of delivering the product, divided by revenue. Software businesses commonly have high gross margins, while hardware, marketplaces, and services businesses run lower because each sale carries real cost. It tells investors how much of each dollar is left over to fund growth.
Earnings before interest, taxes, depreciation, and amortization: a rough measure of operating profit before financing and accounting choices. Early-stage startups usually aren't profitable enough for it to matter, but it comes up with later-stage investors and acquirers who price companies on it.
A specific number you track to know whether the business is working, like monthly revenue, active users, or conversion rate. The trick is picking a few that actually drive your business instead of a dashboard of everything. Investors will often ask which handful you look at every week.
A SaaS benchmark: your revenue growth rate plus your profit margin should add up to at least 40%. A company growing 60% with a negative 15% margin scores 45. It's a way to weigh growth against efficiency, and it matters more for later-stage companies than early ones.
Comparing a number to the same period a year earlier, which filters out seasonality. A retailer's December looks great next to November, but the real question is December versus last December. Investors use YoY growth as a quick read on momentum.
Profit from an investment divided by what it cost, as a percentage. It's simple, but it ignores timing, so a return earned over ten years looks the same as one earned in one. That's why investors also look at measures that account for how long the money was tied up.