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Escrow

1. A legal arrangement in which a third party holds a large sum of money until conditions are met– at which point the monies are disbursed to the intended party.

In startup investing land, this means that a third party holds the actual investment money until closing conditions (such as meeting the minimum for a raise) are met. Before these conditions are met, an investor can withdraw their investment.

2. Limbo for funds.

Example sentence: After investing in SunSipz (the very first startup I invested in), I panicked when I saw my investment was in escrow! But then I realized that was just the waiting room for my monies and that, once the raise ended successfully, the company would actually get the funds.

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