Investing Glossary

Browse 6 investing terms defined in plain English, from the cultural dictionary of computing.

6 Investing Terms

Internal Rate of Return: A financial metric estimating the annualized effective return of an investment based on the timing of cash outflows and inflows. Venture funds use IRR to judge...
IRR: Short for internal rate of return, a time-sensitive measure of investment performance. In venture, IRR matters because the timing of exits changes the...
Market Risk: The possibility that demand, pricing, timing, or broader market conditions will make a business underperform even if the product is competently executed....
Risk Capital: Capital invested with the understanding that the probability of loss is meaningful because the opportunity is uncertain but potentially high return. Venture...
Risk Tolerance: The degree of uncertainty, downside, or volatility a person or organization is willing to accept when making decisions. Startup strategy often depends as much...
Upside: The potential positive outcome or gain if things go well, whether in valuation, revenue, market share, or personal compensation. Startup decisions constantly...