Introduction

In today’s ever-evolving startup ecosystem, knowing your pitch and understanding the language of fundraising is important. Whether you’re raising your first seed round or prepping for a Series A, a firm grasp of key fundraising terms can make your conversations sharper and your decisions more impactful.

As a global accelerator from India, Marwari Catalysts has worked closely with 100+ Indian founders, helping them navigate the complexities of startup funding with clarity and confidence.

So, here’s a quick and founder-friendly glossary of the most essential fundraising terms for 2025, designed especially for the next generation of changemakers.

1. Pre-Seed, Seed, & Series Rounds

Pre-seed is where most Indian founders start raising small amounts from friends, family, or angel investors to build an MVP (minimum viable product). The pre-seed round is all about validating the idea and getting some traction. Once you’ve got early validation, you raise a seed round, which is usually raised from micro-VCs, accelerators, or syndicates. The goal of the seed round is to build the product, expand the team, and begin gaining market share. The next is a series of rounds, which is for scaling operations, entering new markets, and accelerating profitability.

Identifying the right stage prevents under- or over-raising and helps you target the right investors.

2. Equity vs. Debt Financing

This is about how you raise funds, by giving up ownership (equity) or borrowing (debt). Choosing the right mix helps you retain control while managing growth capital effectively.

• Equity Financing: You offer a stake in your startup to investors in exchange for capital. They become shareholders and have a say in business decisions depending on the terms.
• Debt Financing: You borrow money that you agree to pay back with interest. No equity is given up, but the repayment obligation remains, regardless of your business performance.
• Hybrid Options: Convertible notes and SAFEs (explained below) are popular alternatives for early-stage founders.

3. SAFE (Simple Agreement for Future Equity)

A SAFE is a funding investment where investors put in money now for equity later, usually during a priced round like Series A. No valuation negotiations are required at the time of the SAFE, and it’s founder-friendly, faster, and cheaper to execute than traditional equity. Many Indian accelerators and angel investors now use SAFEs, especially for early-stage deals.

4. Term Sheet

A term sheet is the document that outlines the basic terms and conditions of an investment deal. It includes valuation, equity percentage, investor rights, board seat provisions, and liquidation preferences. Although it isn’t legally binding, it’s the foundation of the final agreement.
You must always understand and negotiate your term sheet. It sets the tone for the entire investor relationship.

5. Valuation

• Pre-Money Valuation is how much your startup is worth before the new investment.
• Post-Money Valuation is the value after the funds are added.

For example, if you raise ₹1 crore on a ₹4 crore pre-money valuation, your post-money valuation becomes ₹5 crore. Your valuation affects how much equity you’re giving away. Too high, and future rounds get tricky. Too low, and you may give away too much early on.

6. Dilution

When you raise funds by issuing new shares, your percentage of ownership decreases; this is called dilution. For example, if you own 100% and raise money by giving away 20%, you now own 80%.
Innovative founders plan their fundraising in a way that brings in capital without losing too much control too early.

7. Capitalisation Table

A cap table is a spreadsheet (or tool) that shows who owns what in your startup—founders, investors, advisors, and ESOP holders. It’s updated after each funding round and tracks equity ownership, dilution over time, and option pool distribution.

A messy capitalisation table scares investors. Keeping it clean shows that you know your numbers and value transparency.

8. Lead Investor

A lead investor is the one who puts in the biggest cheque, sets the terms, often helps you bring in other investors, and supports you beyond just the capital by guiding, networking, and mentoring in making strategy. Therefore, having a credible lead investor increases your startup’s reputation and eases the fundraising process.

9. Due Diligence

This is the investor's audit of your startup. They’ll examine your business’s legal compliance, financial records, product performance, team credentials, and market potential. A clean and transparent due diligence process reflects professionalism and builds investor confidence and trust. This process can last days to weeks, and how organised you are can make or break a deal.

Fundraising Ideas That Work in 2025

Beyond VCs and angel rounds, Indian founders today have more fundraising options than ever:

• Global accelerator programs (like Marwari Catalysts)
• Crowdfunding platforms
• Startup competitions & pitch events
• Government-backed grants and incubators
• Alumni networks or niche communities like the Association of Fundraising Professionals

Diversifying your fundraising strategy helps you find value-aligned investors, not just capital.

Conclusion

Fundraising in 2025 isn’t just about pitching; it’s about preparation. And that starts with knowing your terms, your numbers, and your narrative. The more you understand the language of funding, the more confident and convincing you’ll be in every investor meeting.

At Marwari Catalysts, a global accelerator from India, we empower Indian founders to raise smarter, not just faster.
Join our 100+ Co-founders Club and gain access to capital, coaching, and a community that’s built to scale with you.

Also Read : Confused Between AIFs and VCs? Here's What Startup Founders Should Know in 2025