Once upon a time, some founders needed money. They pitched a group of investors, and the investors agreed to give them many gold coins at a set valuation. The founders were happy, and the investors were happy. The company prospered, and everyone lived happily ever after.

A first summarizes the material terms of a financing transaction. are normally not legally binding (with certain exceptions, such as confidentiality and exclusivity) but they are generally thought of as morally binding.

As a first time founder, I remember running from pitch to pitch trying to close that first round of funding, dreaming of a huge valuation that would be clickbait for the press, paper over my entrepreneurial insecurities, and be my user-growth silver bullet.

Hollywood’s exclusive parties include only the hottest A-listers. Exclusive sales are advertised only to a boutique’s biggest spenders. The world has its own take on exclusivity: Investors and buyers routinely insert an “exclusivity provision” into of companies they’re looking to fund or buy.

You might know it as a or a . Maybe you’ve heard it referred to as an MOU, or memorandum of understanding. Whatever you call it, this document of about five pages is a summary of the terms of a deal the parties hope to close down the line.

You’ve just received your first venture capital . Congratulations—you’ve earned it. Now what does it all mean? “Pre-money valuation,” “ preference,” “pro-rata rights”? A seasoned venture capitalist (in this post, a VC or investor) has seen and invoked these concepts hundreds, if not thousands, of times. You? Maybe not so much.