Glossary

74 posts

The investing and venture capital community has a distinctive set of jargon unique to its field.

Investment Glossary

Starting a new business often involves joining an incubator or accelerator program, which provides support and resources to grow the startup. An effective elevator pitch can captivate an angel investor or venture capitalist, professionals who offer financial support for equity.

A well-structured capitalization table, showing the company’s equity ownership, is vital when seeking investment. Investors perform due diligence, investigating the startup’s value and risks before presenting a term sheet, outlining the investment’s basic terms.

Investors may offer committed capital or convertible loans that can be turned into equity later. Existing shareholders may experience dilution, where their ownership percentage reduces as new shares are issued.

Private equity firms are also involved in funding startups, differing from venture capitalists by investing in more established companies. The deal flow, representing the rate of business proposals and investment offers, is vital for investors.

A formal investment agreement may be preceded by a letter of intent, laying out the primary terms of the deal. Liquidity, referring to how quickly assets can be bought or sold, is another essential consideration for both investors and startups. Understanding these terms is crucial for successful fundraising and growth.

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Bootstrapping startup

byBram Speelman
August 27, 2023

What Is Bootstrapping? Financial bootstrapping refers to the process of starting and growing a business using only personal…

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MVP

byBram Speelman
August 26, 2023

Minimum Viable Product (MVP) The term MVP, or Minimum Viable Product, is a concept that has become a…

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Burn rate

byBram Speelman
August 25, 2023

What Is Burn Rate? Burn rate refers to the rate at which a company is spending its capital,…

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Churn Rate

byBram Speelman
August 24, 2023

What is Churn Rate? Churn rate, also known as attrition rate, is a business metric that calculates the…

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ARPU

byBram Speelman
August 23, 2023

ARPU, or Average Revenue Per Unit, is a crucial metric in the business world, particularly for companies that…

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Simple Agreement for Future Equity (SAFE)

byBram Speelman
August 22, 2023

What is a SAFE? A Simple Agreement for Future Equity (SAFE) is a flexible investment contract that enables…

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Convertible Note

byBram Speelman
August 21, 2023

Convertible notes, also known as “convertible loan notes” or “CLNs,” have gained significant traction in the startup financing…

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Startup stock options

byBram Speelman
August 16, 2023

What are Startup Stock Options? Startup stock options are a type of equity compensation given to employees, advisors,…

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What is a cap table?

byBram Speelman
August 16, 2023

A cap table is a spreadsheet or table that provides a detailed overview of the ownership structure of…

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Liquidity Premium

byBram Speelman
August 15, 2023

Definition of Liquidity Premium The liquidity premium refers to the additional return or yield demanded by investors for…