Glossary of Legal Terms

The Legal Terms Glossary defines over 100 of the most common legal terms in easy-to-understand language. Terms are listed in alphabetical order and can be better accessed by choosing a letter

A

Acquisition

TLDR:An acquisition is a corporate strategy where one company purchases most or all of another company's shares to gain control....

Advisory Board

An Advisory Board is a group of external experts formed to provide strategic advice and insights to the management of...

Airdrop

The free distribution of tokens and coins to wallet addresses in order to promote a new digital asset or project,...

Anonymization

Anonymization is the process of transforming personal data in such a way that individuals cannot be identified from the data,...

Antitrust

Antitrust law regulates the establishment, utilization, and exploitation of market dominance. In certain regions like the United States, it is...

Articles of Incorporation

Articles of incorporation are a legal document that establishes the formation of a corporation. Entities file them with the appropriate...

B

Board Observer

A Board Observer holds a non-voting position that allows them to attend and observe board meetings, providing an opportunity for...

Board of Directors

TLDR:The Board of Directors is a group of individuals elected to represent shareholders and oversee the activities of a corporation,...

C

Cap Table

TLDR:A capitalization table (cap table) is a comprehensive spreadsheet or table that shows the equity capitalization for a company. It...

Cold Wallet

A cold wallet is an offline cryptocurrency wallet, making it one of the safest methods for storing digital assets. This...

Consent

What is Consent? As defined by the General Data Protection Regulation (GDPR), is a lawful basis for processing personal data....

Corporate Venture Capital

What is Corporate Venture Capital? Corporate Venture Capital (CVC) refers to the investment of corporate funds directly into external startup...

Crowdfunding

What is Crowdfunding? Crowdfunding is a method of raising capital through the collective effort of a large number of individual...

Crypto Exchange

A crypto exchange is a platform where customers can trade cryptocurrencies or digital currencies for other assets, such as conventional...

D

Data Encryption

Data encryption is a method used for confidentiality and security of the stored data by transforming it into an unreadable...

Data Protection Officer ("DPO")

Who is Data Protection Officer ("DPO") ? Under the General Data Protection Regulation (GDPR), a Data Protection Officer (DPO) is...

De-Fi (Decentralized Finance)

What is DeFi? Decentralized Finance, or DeFi, refers to the transition from traditional, centralized financial systems to peer-to-peer finance enabled...

Due Diligence

What is Due Diligence Process for Startups Due diligence is a critical step in the startup lifecycle, involving a comprehensive...

E

Employee Stock Option Plan (ESOP)

TLDR:An Employee Stock Option Plan (ESOP) is a benefit plan offering employees the right to purchase company stock at a...

G

GameFi

What is GameFi? GameFi integrates blockchain technology with video gaming, allowing players to earn cryptocurrency and NFTs through their in-game...

General Assembly

TLDR:A General Assembly in the context of corporate governance refers to a formal meeting of the shareholders of a company....

General Data Protection Regulation (GDPR)

What is GDPR? General Data Protection Regulation (GDPR) is a comprehensive data protection law that came into effect on May...

Governance Token

TLDR:Governance tokens are digital assets in decentralized networks that grant holders voting rights on project decisions, allowing for a decentralized...

H

Health Data

Health data is defined as any personal data related to the physical or mental health of an individual. This includes...

Howey Test

The Howey Test is a legal standard used in the United States to determine whether a transaction qualifies as an...

J

Joint Stock Company

A Joint Stock Company (JSC) is a type of business entity where the capital is divided into shares owned by...

Joint Venture

A joint venture (JV) is a strategic alliance where two or more parties, usually businesses, agree to collaborate by pooling...

K

Key Personnel

Key personnel are crucial employees or team members whose skills, expertise, and actions are critical to a startup's success. These...

L

Liquidation Preference

Liquidation preference is a critical term in venture capital agreements that determines the payout order among shareholders if a company...

Lock-Up Period

The lock-up period is a predetermined span of time following an Initial Public Offering (IPO) during which major shareholders, such...

M

Market Cap

Market capitalization ("Market Cap"), is the total market value of a company's outstanding shares of stock. It is calculated by...

Merger

TLDR:A merger is a strategic move in corporate finance where two companies combine to form a single entity, aiming to...

Mininum Viable Product (MVP)

TLDR:A Minimum Viable Product (MVP) is the most basic version of a new product that allows a team to collect...

N

Non-Disclosure Agreement

TLDR:A Non-Disclosure Agreement (NDA) is a legal contract between two or more parties that outlines confidential information the parties wish...

Non-Fungible Token (NFT)

Non-Fungible Tokens (NFTs) are blockchain-based digital assets representing unique items or content, transforming digital ownership and value perception. Unlike traditional...

P

Phantom Stock

TLDR:Phantom stock is a financial incentive mechanism provided by companies to their employees, offering benefits tied to the company's stock...

Post-Money Valuation

Post-money valuation refers to the value of a company immediately after it has received external funding or investments. In venture...

Pre-Money Valuation

Pre-money valuation is the value of a company before receiving new investments. It is a critical metric used by venture...

Pre-Seed Funding

Pre-seed funding is the initial financing round that a start-up raises to develop its idea, build a prototype, and prepare...

Preferred Stock

TLDR:Preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings...

Privacy Notice

What is a Privacy Notice? A privacy notice, is a document provided by an organization to individuals whose personal data...

R

Royalty

A royalty is a term usually used in intellectual property (IP) law. It refers to payments made by the party...

S

Shareholders' Agreement

A shareholders' agreement is a legally binding contract among a company's shareholders. It outlines the rights, responsibilities, and obligations of...

Smart Contracts

TLDR:Smart contracts are self-executing contracts with the terms of the agreement directly written into lines of code, hosted on blockchain...

SPV

A Special Purpose Vehicle (SPV), also referred to as a Special Purpose Entity (SPE), is a subsidiary company that a...

T

Tag Along

Tag Along rights, also known as co-sale rights, are a legal agreement commonly used in venture capital and private equity...

Term Sheet

A term sheet outlines the fundamental terms and conditions of a potential investment. It's a non-binding agreement (usually) between a...

Tokenomics

Tokenomics involves the study and design of tokens or cryptocurrencies, focusing on the economic principles that govern their issuance, distribution,...

U

Utility Token

TLDR:Utility tokens are digital assets designed for specific use within a particular blockchain ecosystem. Unlike cryptocurrencies purely used for financial...

V

Valuation

Startup valuation is the process of determining the worth of a startup business. This assessment is crucial for attracting investments,...

Venture Capital

What is Venture Capital Venture Capital (VC) is funding provided by investors to early-stage startups with high growth potential in...

W

Web3

Web3 represents the third generation of internet services for websites and applications. It leverages blockchain technology, cryptocurrencies, and token-based economics...

Whitepaper

Whitepaper is a blockchain term used for comprehensive documents that outline a blockchain-based project's concept, technology, features, and roadmap. It...