జార్గన్ వర్డ్స్

జార్గన్ వర్డ్స్

రచన వివేక్ నామ తేది 24/02/2017

1)Incubator: These are places where you are provided with mentorship, a space to work and may be provided cash support initially to get any startup from the ground-up. 2) Disruptive Technology: Any technology that could change the very dynamics of way things are being done could be referred to as disruptive. Examples associated with this could be an Apple iPhone or Uber! 3) First Mover Advantage: It means aspiring entrepreneurs/startups are first into the market with a new unique idea, that may give them an advantage to capture the domain. 4) Burn Rate: It refers to the amount of cash being spent by a startup, which may mean losses for several years before breaking even. 5) Exit Strategy: How does a startup plan to sell their company? Who will be interested in acquiring your business and ensuring that the investors receive more than their share of what they invested. 6) Fremium: A business model in which basic services are provided free of charge. To procure premium services, a fee must be paid. For example, in the Google Play Store, applications are available on freemium model but some require an in-app purchase to unlock these premium services. 7) Growth Hacking: Using non-conventional means to quickly accelerate growth of a startup, for example using social media. 8) Minimum Viable Product: A product that has minimum possible features which make it ready for shipping for early adopters to view and purchase. 9) Pivot: It pinpoints towards the business model which may require changing, in light of losses suffered or not being commercially feasible. 10) Monetization: It refers to how a product is being sold or services rendered by a startup in order to generate revenues. Or for example, how a startup forecasts it will earn money from the product it sells. 11) Valuation: Startups have a market value, how much their business is worth etc. 12) Lean Startup: It is a scientific way of initiating and managing startups, ensuring the product gets into the consumer hands faster. The lean startup acts as a guidance tool on how to assist a startup, how to steer, when to turn, when to keep persisting and grow a business with increasing acceleration. 13) Low Hanging Fruit: The easiest way for a startup to earn money quickly. It is hard to pinpoint but crucial for startups success. 14) Bleeding Edge: It is the cutting edge of technology, something astronomical which makes a startup believe they are right there or its business model is one of a kind. 15) B2B: It references to a startup business selling its product or services to another company. 16) B2C: It references to a startup business selling its products to consumers at large i.e general public. 17) Leverage: A startup using technology to their benefit. For example, it means using anything to the advantage of their business. 18) Traction: It means the public is buying and using your products in reality. For example Daraz.pk selling smartphones or a variety of other products. 19) Return on Investment (ROI): The return given to the venture capitalist on the money invested by it in the startup. 20) Software As A Service (SAAS): A startup using subscriptions to sell their product. For example, Eccountant, a Pakistani startup, provides web based bookkeeping solution with a subscription tier. 21) Seed Capital: It is the initial capital or finances required to start a startup. This kind of funding usually comes from business owners, family members or friends A Round Financing -  "A" Round Financing - The first major round of business financing by private equity investors or venture capitalists. In private equity investing, an “A” round, or Series A financing, is usually in the form of convertible preferred stock. An “A” round by external investors generally takes place after the founders have used their seed money to provide a “proof of concept” demonstrating that their business concept is a viable and eventually profitable one. 1 Accelerator -  In an accelerator, a Seed investment is made in return for equity and usually between $15K - $50K. Startups are admitted in classes and work in groups. They are generally given a deadline to complete intensive training and iteration (typically 1 week to 6 months). Startups end an accelerator program with a Demo Day in which they pitch to investors.2  Accredited Investor -  An individual with $1,000,000 or more in net worth (assets - liabilities), excluding their primary residence, or $200,000 in annual income, or $300,000 of income if earned jointly with their spouse, for the previous two years with a reasonable expectation of continued income for the following year.  Note that separate definitions apply for legal entities.6  - Synonyms: Accredited (Investor) Accrued Interest -  The interest due on preferred stock or a bond since the last interest payment was made. 3  - Synonyms: Accrued Interest Acqui-hire -  One company's acquisition of another for the primary purpose of hiring its employees, rather than for the intrinsic value of the business itself.7 Acquisition -  A process under which a company acquires the controlling interest of another company.6 ACRS -  Accelerated Cost Recovery System. The IRS-approved method of calculating depreciation expense for tax purposes. Also known as Accelerated Depreciation. 3  - Synonyms: Accelerated Cost Recovery System Add-on Service -  Add-on Services are the services provided by a venture capitalist that are not monetary in nature, such as helping to assemble a management team and helping to prepare the company for an IPO.9 ADR -  American Depositary Receipt (ADRs). A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets. 3  - Synonyms: American Depositary Receipt Adventure Capitalist -  An adventure capitalist is an entrepreneur who helps other entrepreneurs financially and often plays an active role in the company's operations such as by occupying a seat on the board of directors, etc.9 Advisor -  An individual providing business connections, guidance, advice and support to the entrepreneur as they develop and grow their startup.6 Advisory Board -  A group of external advisors to a private equity group or portfolio company. Advice provided varies from overall strategy to portfolio valuation. Less formal than a Board of Directors.3 Allocation -  The amount of securities assigned to an investor, broker, or underwriter in an offering. An allocation can be equal to or less than the amount indicated by the investor during the subscription process, depending on market demand for the securities.3 Alpha Test -  Internal testing, of a pre-production model, typically on a controlled basis, with the objective of identifying functional deficiencies and design flaws.6 Amortization -  An accounting procedure that gradually reduces the book value of an intangible asset through periodic charges to income.3 AMT -  Alternative Minimum Tax. A tax designed to prevent wealthy investors from using tax shelters to avoid income tax. The calculation of the AMT takes into account tax-preference items.3  - Synonyms: Alternative Minimum Tax Angel Capital Association -  A North American association of angel groups, accredited investors and family offices which promotes public policies for investors and startups. The association provides investors access to trending ideas and professional knowledge and entrepreneurs insight into how angels think. See www.angelcapitalassociation.org  for more information.6  - Synonyms: ACA Angel Financing -  Seed capital raised from independently wealthy investors, for startup companies.6 Angel Fund -  A formal or informal assemblage of active angel investors who cooperate in some part of the investment process. Key characteristics of an angel group are: control by member angels (who manage the entity or have control over the entity’s managers), and collaboration by member angels in the investment process.3 Angel Group -  An organization composed of accredited investors which serves as a platform for them to coordinate investments in seed and early stage startup companies.  The group members typically work together consolidating their resources, expertise and capital through informal networks or formal funds.6     Angel Investor -  Once, an unrelated individual investing monies in a business venture, often later than founders, friends and family (the “3F’s”), but before larger corporate investors such as venture capitalists (“VC’s”). The term “angel” arose in the entertainment industry, where investors would bankroll a production for a share of the profits. Now, with wealthier individuals able to invest significant funds throughout the development of a company (so-called “super-angels”), and venture capitalists sometimes investing alongside and on the same terms as angels, a more modern definition is that “angels” write checks with their own money, while “VC’s” write checks with other people’s money (venture capitalists typically raise funds from investors called “limited partners” who do not actively participate in the fund’s investment decisions and operations, whereas the VC’s act as the “general partners” making the investment decisions and overseeing the invested companies.) Angel Round -  A round of investment into a startup company from angel investors not previously affiliated with the founder.  Typically the first money invested in a company after the founders own money, and the founders friends and family.7 Annex Fund -  Annex funds are side funds that can provide an extra pool of money to supplement the original VC Funds.9 Annual Recurring Revenue -  The recurring subscription-based revenue which software as a service / platform as a service, (SaaS / PaaS) based companies receive annually; also known as the run rate.6  - Synonyms: ARR Anti Dilution Provisions -  Anti Dilution Provisions are contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price. Examples include Broad-Based Weighted Average Ratchet, Narrow-Based Weighted Average Ratchet, and Full Ratchet Anti Dilution.9 Articles of Incorporation -  Documentation filed with the Secretary of State or Company Registrar which acts as a charter to document the establishment and existence of a corporation.6  - Synonyms: Certificate of Incorporation, Corporate Charter Articles of Organization -  Documentation filed with the Secretary of State which acts as a charter to document the establishment and existence of a Limited Liability Company.6 Assets -  This word refers to all financial resources that a corporation owns. Current assets can be any form of currency, including traded inventory, investments, and checks. Fixed assets (capital assets) consist of material goods and equipment of a company, such as the land by which the company sits on, the company building, and technological machinery. Intangible assets mainly comprise of intellectual property protection, copyrights, patents, etc.4 Balance Sheet -  A condensed financial statement showing the nature and amount of a company’s assets, liabilities, and capital on a given date.3 Bankruptcy -  An inability to pay debts. Chapter 11 of the bankruptcy code deals with reorganization, which allows the debtor to remain in business and negotiate for a restructuring of debt.3 Bear Hug -  An offer made directly to the Board of Directors of a target company. Usually made to increase the pressure on the target with the threat that a tender offer may follow.3 beBee -  A business oriented social media platform which can be found online at www.bebee.com.6 Benchmarks -  Benchmarks are performance goals against which a company's success is measured. Benchmarks are often used by investors to help determine whether a company should receive additional funding or whether management should receive extra stock.5 Best Efforts -  An offering in which the investment banker agrees to distribute as much of the offering as possible and return any unsold shares to the issuer.3 BHAG -  Big Hairy Audacious Goal, the giant sweeping vision of a startup founder to change the world.7  - Synonyms: Big Hairy Audacious Goal Big Hairy Audacious Goal -  The giant sweeping vision of a startup founder to change the world.7 Black Swan -  An unpredictable event typically with extreme consequences.7 Blind Pool -  A blind pool is a form of limited partnership which doesn't specify what investment opportunities the general partner plans to pursue.9 Blue Sky Laws -  A common term that refers to laws passed by various states to protect the public against securities fraud. The term originated when a judge ruled that a stock had as much value as a patch of blue sky.3 Board of Directors -  A group of people elected by the company's shareholders (often to the terms of the negotiated Shareholders Agreement) that makes decisions on major company issues, including hiring/firing the Chief Executive Officer.7 Bond -  Specific type of debt instrument most commonly sold by government entities.3 Book Value -  Book value of a stock is determined from a company’s balance sheet by adding all current and fixed assets and then deducting all debts, other liabilities, and the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding, and the result is book value per common share.3 Bootstrapping -  Funding a company only by reinvesting initial profits; from "pulling yourself up by your own bootstraps."7 Bridge Financing -  A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to “bridge” a company to the next round of financing.3 Bridge Loan -  A temporary short-term loan that is obtained for use for an interim period,  typically one year, until the borrower can obtain a more comprehensive, longer-term financing package.6 Broker-Dealer -  In reference to “Crowdfunding”, one of the two types of "Intermediary" (“Portals” being the other) authorized by the “JOBS Act” to handle the sale of crowdfunded securities (i.e. equity or debt instruments) by an “issuing company”.  More generally, a governmentally regulated component of the U.S. financial system, either a natural person or an organization trading securities on its own account or on behalf of customers.  Broker-dealers are regulated by the federal Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA)(a “Self-Regulatory Organization”, or “SRO”), and sometimes the various states.1 Brokers -  Licensed individuals or firms, which charge a fee, to raise capital for startup companies from private investors and funds.6 Burn Out -  AKA. Cram Down - Extraordinary dilution, by reason of a round of financing, of a non-participating investor’s percentage ownership in the issuer.3 Burn Rate -  The rate at which a company expends net cash over a certain period, usually a month.3 Business Development Company -  (BDC) A vehicle established by Congress to allow smaller, retail investors to participate in and benefit from investing in small private businesses as well as the revitalization of larger private companies.3  - Synonyms: BDC Business Judgment Rule -  The legal principle that assumes the board of directors is acting in the best interests of the shareholders unless it can be clearly established that it is not. If the board was found to violate the business judgment rule, it would be in violation of its fiduciary duties to the shareholders.3 Business Model Canvas -  Based on nine building blocks, the Business Model Canvas is an entrepreneurial tool that enables entrepreneurs to design, develop, articulate, challenge, invent and pivot their strategic business model. The building blocks referenced above include customer segments, value proposition, channels, customer relations, revenue streams, key resources, key activities, key partnerships, and cost structures.6  - Synonyms: Business Canvas Business Plan -  A document utilized by management and relied upon heavily by some investors, that entrepreneurs use in detailing their business concept as well as their company’s overall strategic and financial objectives. In recent years the Business Model Canvas has become increasingly popular with both entrepreneurs and managers as a guide or framework for the startup's efforts, and in many cases is now utilized in lieu of the Business Plan by these parties.6 Business Plan Competition -  A program historically run by a university or other not-for-profit organization to encourage students to develop plans for a new business.  Increasingly a showcase competition for existing startups seeking financing from angels and other investors.7 Buyout -  A buyout is defined as the purchase of a company or a controlling interest of a corporation's shares, product line or business. A leveraged buyout is accomplished with borrowed money or by issuing more stock.9 C-Corporation -  A legal structure, preferred by investors and many entrepreneurs of startup companies seeking funding.  Like Limited Liability Companies, (LLCs) and S-Corporations, C-Corporations protect shareholders from liability in the event of a legal issue or bankruptcy.  Unlike LLCs and S-Corporations, C-Corporations may not make an election to pass corporate income, deductions and losses to shareholders for federal tax purposes.  However, C-Corporations have no limits on the number of shareholders which may own their shares. Entrepreneurs and investors typically prefer that their startup's C-Corporation be registered  in Delaware.  However, Nevada and Wyoming are becoming increasingly popular.   Additionally, many entrepreneurs chose to register as a C-corporation in their own state.6 CAGR -  Compound Annual Growth Rate. The year-over-year growth rate applied to an investment or other aspect of a firm using a base amount.3 Call -  A contractual term/condition which provides the company the option to compel the investor to sell their shares.6 Call Option -  The right to buy a security at a given price (or range) within a specific time period.3 Cap -  The maximum company valuation at which a convertible note will convert into a company's stock.7 Capital -  Financial capital is a term that can refer to the money exchanged between entrepreneurs and investors during a business deal. Entrepreneurs need to raise capital for their startups while investors can provide them with the needed capital (or funding). Financial capital usually comes with interest, and new business owners can use their financial capital in purchasing real capital (or machinery or equipment) for their new business.4 Capital Expenditures -  Capital Expenditures are money spent by a company to add or expand property, plant, and equipment assets, with the expectation that they will benefit the company over a long period of time (more than one year).9  - Synonyms: Capital Outlay Capital Gains -  The difference between an asset’s purchase price and selling price, when the selling price is greater. Long-term capital gains (on assets held for a year or longer) are taxed at a lower rate than ordinary income.3 Capital Gain is the gain to investor from selling a stock, bond or mutual fund at a higher price than the purchase price. The capital gain is usually the amount realized (net sales price) less your investment (adjusted tax basis) in the property. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.5 Capital Under Management -  The amount of capital available to a angel or VC Fund's management team for startup venture investments.6  - Synonyms: Assets Under Management Capitalization Table -  A table depicting the quantity of shares or unit ownership which is held by each investor in a corporation or LLC, typically including founders' equity, investor equity, and advisor / employee Stock Option Pools.6 Capitalize -  To record an outlay as an asset (as opposed to an expense), which is subject to depreciation or amortization.3 Carried Interest -  or “Carry3” The portion of any gains realized by the fund to which the fund managers are entitled, generally without having to contribute capital to the fund. Carried interest payments are customary in the venture capital industry, in order to create a significant economic incentive for venture capital fund managers to achieve capital gains.3 Cash Position -  The amount of cash available to a company at a given point in time.3 Chapter 11 -  The part of the Bankruptcy Code that provides for reorganization of a bankrupt company’s assets.3 Chapter 7 -  The part of the Bankruptcy Code that provides for liquidation of a company’s assets.3 Claim Dilution -  A reduction in the likelihood that one or more of the firm’s claimants will be fully repaid, including time value of money considerations.3 Clawback -  A clawback obligation represents the general partner’s promise that, over the life of the fund, the managers will not receive a greater share of the fund’s distributions than they bargained for. Generally, this means that the general partner may not keep distributions representing more than a specified percentage (e.g., 20%) of the fund’s cumulative profits, if any. When triggered, the clawback will require that the general partner return to the fund’s limited partners an amount equal to what is determined to be “excess” distributions.3 Closed-end Fund -  A type of fund that has a fixed number of shares outstanding, which are offered during an initial subscription period, similar to an initial public offering. After the subscription period is closed, the shares are traded on an exchange between investors, like a regular stock. The market price of a closed-end fund fluctuates in response to investor demand as well as changes in the values of its holdings or its Net Asset Value. Unlike open-end mutual funds, closed-end funds do not stand ready to issue and redeem shares on a continuous basis.3 Closing -  An investment event occurring after the required legal documents are implemented between the investor and a company and after the capital is transferred in exchange for company ownership or debt obligation.3 This is the transaction that occurs after entrepreneurs and investors legally exchange all required legal documentation and capital that is needed in their business deal. When an investor “closes in on a deal,” they have already negotiated with the entrepreneur the details encompassing corporate ownership and monetary obligation.4 Closing is the final event to complete the investment, at which time all the legal documents are signed and the funds are transferred.5 Co-invest -  When more than one investor joins in making an investment on similar terms.7 Co-investment -  The syndication of a private equity financing round or an investment by an individual (usually general partners) alongside a private equity fund in a financing round.3 Collar Agreement -  Agreed-upon adjustments in the number of shares offered in a stock-for-stock exchange to account for price fluctuations before the completion of the deal.3 Collateral -  This word is used in the financial transaction between the lender and borrower. Often times, when entrepreneurs seek capital from a financial institution, they use their assets (personal belongings and material goods) as a “collateral” or security for their loan. Should the borrower default on payments, the lending institution has the legal authority confiscate those assets.4 Committed Capital -  The total dollar amount of capital pledged to a private equity fund.3 Common Stock -  A class of ownership that has lower claims on earnings and assets than Preferred Stock. It is riskier to own common stock because in the event of Liquidation, common stock shareholders are the last to claim rights to assets.2 A unit of ownership of a corporation. In the case of a public company, the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in some cases receive dividends on their holdings. Investors who purchase common stock hope that the stock price will increase so the value of their investment will appreciate. Common stock offers no performance guarantees. Additionally, in the event that a corporation is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock take precedence over the claims of those who own common stock.3 This term represents a constituent in corporate ownership. People who own shares of common stock (common stockholders) often have voting rights in their company’s decision-making matters and executive board of elections.  Through company dividends and capital appreciation of corporate assets, common stockholders can also share in their company’s financial success.4 Conversion Ratio -  The number of shares of stock into which a convertible security may be converted. The conversion ratio equals the par value of the convertible security divided by the conversion price.3 Convertible -  Convertibles are the corporate securities, usually preferred shares or bonds, that can be exchanged for a set number of another form, usually common share, at a pre-stated price. Convertibles are appropriate for investors who want higher income than is available from common stock, together with greater appreciation potential than regular bonds offer. From the issuer's standpoint, the convertible feature is usually designed as a sweetener, to enhance the marketability of the stock or preferred.5 Convertible Note -  A debt instrument that can be converted into another security, such as shares of common or preferred stock.6 Convertible Preferred Stock -  Preferred stock that may be converted into common stock or another class of preferred stock, either voluntarily or mandatory.3 Convertible Security -  A bond, debenture or preferred stock that is exchangeable for another type of security (usually common stock) at a pre-stated price. Convertibles are appropriate for investors who want higher income, or liquidation-preference protection, than is available from common stock, together with greater appreciation potential than regular bonds offer. (See Common Stock, Dilution, and Preferred Stock).3 Corporate Charter -  The document prepared when a corporation is formed. The Charter sets forth the objectives and goals of the corporation, as well as a complete statement of what the corporation can and cannot do while pursuing these goals.3 Corporate Resolution -  A document stating that the corporation’s board of directors has authorized a particular individual to act on behalf of the corporation.3 Corporate Venture -  An investment from one corporation in another, typically at an early stage for strategic reasons.7 Corporate Venture Capital -  Corporate venture capital is a subsidiary of a large corporation which makes venture capital investments.5 Corporate Venturing -  Venture capital provided by [in-house investment funds of] large corporations to further their own strategic interests.3 Corporate Venturing is a practice of a large company, taking a minority equity position in a smaller company in a related field.5 Corporation -  A legal entity structure for businesses enterprises which are typically chartered by a state or the federal government, under which ownership is held by shareholders.6 Covenant -  A protective clause in an agreement.3 Cram Down -  AKA. Burn Out - Extraordinary dilution, by reason of a round of financing, of a non-participating investor’s percentage ownership in the issuer.3 Crowdfunding -  “Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”), rather than the alternative pattern of larger amounts from a smaller number of supporters.  Charities and philanthropies have traditionally employed both fundraising strategies (soliciting both the general populace, or crowd, as well as fewer wealthier donors), while businesses have usually taken the route involving fewer and larger supporters.  Today’s internet has vastly increased the ability of fundraisers to communicate information, solicit and receive financial support from anyone on-line. Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing, and have never been illegal in the U.S.  In contrast, soliciting funds in return for a ownership interest or expectation of repayment, are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and have been until now governed (and effectively prevented) by federal and state securities law.  One of the most significant parts (Title III) of the federal “Jumpstart Our Business Startups”, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding”, subject to a variety of regulations and restrictions.1 Crowdfunding Intermediary Regulatory Advocates -  (CfIRA) An open organization of diverse participants and parties interested in the crowdfunding industry (“portals”, “broker-dealers”, professional and business service providers, investors, etc.) dedicated to interacting with each other and advocating with the regulators charged with shaping and governing the nascent industry of securities-based crowdfunding authorized by the JOBS Act.  CfIRA has participated in numerous hearings, written official letters as well as popular articles, etc., both in public as well as government forums (Congress, SEC, FINRA, etc.)  See http://www.cfira.org for more information.1 Crowdfunding Professional Association -  (CfPA) The American industry trade organization dedicated to facilitating a vibrant, credible and growing crowdfunding community, from investors through service providers to entrepreneurs.  See http://crowdfundingprofessional.org for more information.1  - Synonyms: CfPA Cumulative Preferred Stock -  A stock having a provision that if one or more dividend payments are omitted, the omitted dividends (arrearage) must be paid before dividends may be paid on the company’s common stock.3 Cumulative Voting Rights -  When shareholders have the right to pool their votes to concentrate them on an election of one or more directors rather than apply their votes to the election of all directors. For example, if the company has 12 openings to the Board of Directors, in statutory voting, a shareholder with 10 shares casts 10 votes for each opening (10x12 = 120 votes). Under the cumulative voting method however, the shareholder may opt to cast all 120 votes for one nominee (or any other distribution he might choose).3 D&O Insurance -  Insurance obtained by portfolio companies to cover the costs of legal expenses associated with claims against its' board members and protect them from lawsuits.6  - Synonyms: Directors' and Officers' Insurance Daily Active Users -  Distinct website users who engage with a site's offerings or services in a given day.6 Dead Pool -  Where companies that die go.7 Deal Flow -  Deal flow (dealflow) is the rate at which investment offers are presented to funding institutions.5 Deal Lead -  The investor or investment organization taking primary responsibility for organizing an investment round in a company.  The deal lead typically finds the company, negotiates the terms of the investment, invests the largest amount, and serves as the primary liaison between the company and the other investors.7 Deal Structure -  The framework of a deal between investors and a startup company which is typically outlined in a term sheet and defined in detail in Purchase Agreements and related documentation, providing the rights and obligations of the parties.6 Debenture -  A debt instrument; basically the same as a Promissory Note.3 (promissory note)This designation is a legal document detailing the terms of repayment and interest that a borrower is responsible for. It also details the principal amount owed and the maturity date. For example, financial institutions can approve qualified applicants for loans. They send out debenture or promissory statements to borrowers as a reminder of their legal contract.4 Debt -  Any obligation by one person to pay another. May be a primary (direct) obligation as in a Note, or a secondary (contingent) obligation as in a guaranty.3 This is an amount of money that a borrower owes to an individual, investor, or lending institution. In the finance world, the word “debt” is often associated with interest payments. For example, when an individual has a credit card limit of $5,000, the lender, usually a bank, is willing to lend the credit card holder $5,000 of credit. If the lender uses $500 of that total amount, they are now considered to be in $500 debt until the total amount is paid. Partial payment of an owed amount always encompasses interest.4 Debt Financing -  Debt Financing means when a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay principal and interest on the debt.5 Debt Instrument -  Any instrument evidencing the obligation of the maker to pay the holder of the debt instrument. Includes Bonds, Debentures and Notes of all kinds.3 Debt Table -  A debt table is a table providing a summary and analysis of a startup’s debt, by type. It includes details related to the interest rates for each instrument as well as debt service requirements.6 Deficiency Letter -  A letter sent by the SEC to the issuer of a new issue regarding omissions of material fact in the registration statement.3 Demand Registration -  Resale registration that gives the investor the right to require the Company to file a Registration Statement registering the resale of the securities issued to the investor in a private offering.3 Demand Rights -  Contemplate that the company must initiate and pursue the registration of a public offering including, although not necessarily limited to, the shares proffered by the requesting shareholder(s).3 Demo Day -  Where the graduating class of Incubators and Accelerators is given a chance to pitch to investors. 2 Depreciation -  An expense recorded to reduce the value of a long-term tangible asset. Since it is a non-cash expense, it increases free cash flow while decreasing the amount of a company’s reported earnings.3 This term refers to the gradual loss in value of currency, stocks, and material goods. For example, biotechnology can “depreciate” over the course of 4 years.4 Dilution -  Issuing more shares of a company dilutes the value of holdings of existing shareholders.2 A reduction in the percentage ownership of a given shareholder in a company caused by the issuance of new shares.3 Dilution Protection -  Mainly applies to convertible securities. Standard provision whereby the conversion ratio is changed accordingly in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder’s potential equity position. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value. Share Purchase Agreements also typically contain anti-dilution provisions to protect investors in the event that a future round of financing occurs at a valuation that is below the valuation of the current round.3 Director -  Person elected by shareholders to serve on the board of directors. The directors appoint the president, vice president and all other operating officers, and decide when dividends should be paid (among other matters).3 Disclosure Document -  A booklet outlining the risk factors associated with an investment.3 Discounted Convertible Note -  A loan that converts into the same equity security being purchased in a future investment round, but at a discounted price representing a risk premium for early investment.7 Diversification -  The process of spreading investments among various types of securities and various companies in different fields.3 Dividend -  The payments designated by the Board of Directors to be distributed pro-rata among the shares outstanding. On preferred shares, it is generally a fixed amount. On common shares, the dividend varies with the fortune of the company and the amount of cash on hand and may be omitted if business is poor or if the Directors determine to withhold earnings to invest in capital expenditures or research and development.3 Dividend Preference -  Preferred stockholders receive dividends before common stockholders. Dividend can be cumulative or non-cumulative.2 Double Bottom Line -  In Impact Investing, the goal of measuring a company by its positive societal impact in addition to its financial returns.7 Double Dip -  Participating preferred stock which entitles a holder to a liquidation preference and also to participate in the residual value.9 Down-round -  When the valuation of a company at the time of an investment round is lower than its valuation at the conclusion of a previous round.7 Drag-along Rights -  Majority shareholders can force minority shareholders to join in the sale of a company. Minority shareholders will receive same price, terms, and conditions.2 A majority shareholder's right, obligating shareholders whose shares are bound into the shareholders’ agreement to sell their shares into an offer the majority wishes to execute.3 Drip Feed -  When investors fund a startup a little bit at a time instead of in a lump sum.7 Drive-by Deal -  A drive-by deal is slang term often used when referring to a deal in which a venture capitalist invests in a startup with the goal of a quick exit strategy. The VC takes little to no role in the management and monitoring of the startup. 9 Dry Powder -  Money held in reserve by a venture fund or angel investor in order to be able to make additional investments in a company.7 Due Diligence -  A process undertaken by potential investors — individuals or institutions — to analyze and assess the desirability, value, and potential of an investment opportunity.3 This is the process whereby individuals or groups of people conduct independent investigations regarding a particular matter. In the business world, investors conduct timely due diligence when inquiring about prospective investment endeavors. This may entail a background search of the company’s founders, review of the entrepreneur’s credit scores, and routine follow-up with references and associates, etc. New business owners, on the other hand, are encouraged to also conduct due diligence when finding a potential investor. Through due diligence, both the investor and entrepreneur has the opportunity to diligently analyze and assess each other for the potential of an investment opportunity and partnership.4 Due diligence is the process of investigation and evaluation, performed by investors, into the details of a potential investment, such as an examination of operations and management and the verification of material facts.5 Early Exit -  An approach to angel investing popularized by author Basil Peters, in which the goal of an investment is the sale of a company within a few years without requiring additional large investments from VCs, thereby providing high relative returns without requiring companies to be home runs.7 Early Stage -  The key characteristic is market development. The business is focused on sales and marketing and proving business viability.2 A state of a company that typically has completed its seed stage and has a founding or core senior management team, has proven its concept or completed its beta test, has minimal revenues, and no positive earnings or cash flows.3 This term generally refers to a young enterprise that is three years old or younger. During this phase, a company is still in its novel stages of development. They could be in the process of experimenting with new products or services that they intend to market in the near future and/or may have viable products that are already available to the public.4 EBITDA -  Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of cash flow calculated as: = Revenue - Expenses (excluding tax, interest, depreciation, and amortization). EBITDA looks at the cash flow of a company. By not including interest, taxes, depreciation, and amortization, we can clearly see the amount of money a company brings in. This is especially useful when one company is considering a takeover of another because the EBITDA would cover any loan payments needed to finance the takeover.3 Economies of Scale -  Economic principle that, as the volume of production increases, the cost of producing each unit decreases.3 Elevator Pitch -  An elevator pitch is a brief presentation, typically 30 – 60 seconds in duration, presenting the entrepreneur’s concept / solution, business model, “go to market” strategy and value proposition to potential angel or venture capital investors, in order to obtain the attention of the investors, such that they are compelled to learn more about the opportunity.6 An extremely concise presentation of an entrepreneur’s idea, business model, company solution, marketing strategy, and competition delivered to potential investors. Should not last more than a few minutes, or the duration of an elevator ride.3 This term refers to an entrepreneur’s brief verbal summary of their business proposal. The name “elevator pitch” was designated because the entrepreneur’s oral presentation is often the duration of a quick elevator ride.  During an elevator pitch, the entrepreneur concisely outlines their business proposal, marketing strategy, and competitive tactic to potential investors. Prospective business owners are strongly encouraged to polish this pitch, since it can mean the difference between raising desired capital and completely leaving their business ideas behind.4 Employee Stock Option Plan -  (ESOP) A plan established by a company whereby a certain number of shares is reserved for purchase and issuance to key employees. Such shares usually vest over a certain period of time to serve as an incentive for employees to build long-term value for the company.3  - Synonyms: ESOP Employee Stock Ownership Plan -  A trust fund established by a company to purchase stock on behalf of employees.3 Employer Identification Number -  An EIN or employer identification number is a unique, nine-digit identification number utilized by the Internal Revenue Service, (IRS) and assigned to business entities to identify employers as part of the tax reporting process. In order to obtain an EIN, business entities must file or apply to the IRS.6  - Synonyms: Federal Employer Identification Number, (FEIN) Entrepreneur -  A person who organizes and operates a business or businesses, taking on greater than normal financial risks to do so.  Entrepreneurs are the founders of startups and are the people angel investors support.7 Equity -  Ownership in the capital of a Company. In corporations, it is called “stock”; in limited partnerships or LLCs, it is called “interests” or  “units.”3 This designation is given to a stockholder’s ownership in a company. The amount of ownership is obtained when an individual or corporation purchases one or more shares of stock (equity shares).  The more equity purchased, the greater the ownership.4 Equity Financing -  Equity financing is a term used for company's issuance of shares of common or preferred stock to raise money. Equity financing is commonly done when its per share prices are high-the most money that can be raised for the smallest number of shares.5 Equity Kicker -  Option for private equity investors to purchase shares at a discount. Typically associated with mezzanine financings where a small number of shares or warrants are added to what is primarily a debt financing.3 Equity Offerings -  Equity Offerings is raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.5 Equity Seed Round -  When an entrepreneur first sells a part of his or her business - and therefore a proportional part of the good things (like profits) and the not-so-good things (like losses) - to an investor. Equity investments, unlike loans, do not need to be paid back.7 ERISA -  ERISA shall mean the United States Employee Retirement Income Security Act of 1974, as amended, including the regulations promulgated thereunder.3 Significant Participation Test: A test that is satisfied if the General Partner determines in its reasonable discretion that Persons that are “benefit plan investors” within the meaning of Section (f)(2) of the Final Regulation constitute or are expected to constitute at least 25 percent of the interests of the Limited Partners.  Note that the test is 25% of the interests of all the limited partners, which means 20% (+/-) in the partnership as a whole, taking into account the general partner’s interest.3 Escrow -  When a third party holds value during a transaction, releasing it only when a specified condition has been fulfilled.7 European Business Angels Network -  (EBAN) The European equivalent of America’s Angel Capital Association.  See http://www.eban.org for more information.1  - Synonyms: EBAN Exchange Act -  [“34 Act”] Regulates periodic reporting by companies with publicly traded securities, companies with more than 500 shareholders, and brokers and dealers in securities.3  - Synonyms: 34 Act Executive Summary -  An executive summary is a one to two page document which provides an overview of a startup entrepreneur’s business opportunity. It summarizes the key points of the startup’s business plan with a focus on obtaining investor interest, for potential investment. The goal of the executive summary is to grab the attention of the investor, such that they desire to learn more about the opportunity.6 This outline is a very important component of a company’s business plan. It concisely summarizes the proposed business idea(s) and the fundamental objectives of the company. Upon review, the investor(s) should have a precise understanding of the prospective company’s mission. The executive summary is the most informative part of a business plan for the investor(s) and plays an influential role in determining if the company is viable enough for investment.4 Exercise Price -  The price at which an option or warrant can be exercised.3 Exit -  Exit is the sale or exchange of a significant amount of company ownership for cash, debt, or equity of another company.5 Exit Route -  An exit route is the method by which an investor would realize an investment.9 Exit Strategy -  A fund’s intended method for liquidating its holdings while achieving the maximum possible return. These strategies depend on the exit climates, including market conditions and industry trends. Exit strategies can include selling or distributing the portfolio company’s shares after an initial public offering (IPO), a sale of the portfolio company, or a recapitalization.3 This is a company’s negotiated approach whereby investors are given an event or time within the development of their company to receive their return on investment (ROI). This can be achieved through a liquidity event, where their equity is converted into cash.4 Exit Strategy is the way in which a venture capitalist or business owner intends to use to get out of an investment that he/she has made. Exit Strategy is also called liquidity event.5 Expansion Stage Company -  This term generally refers to a company that is three years old or more. During this period of development, a company may already have been successful commercializing many of their products and services but may not generate desired profit.  An enterprise that is in its expansion stage may resort to seeking additional sources of capital to minimize the risk of failure. Many venture capitalists invest during this stage of a company’s development.4 Fiduciary Responsibility -  Refers to trust responsibility to make good investments that will earn a high rate of return.2 Final Regulation -  An ERISA term, it is the United States Department of Labor’s Final Regulation relating to the definition of “plan assets” in (29 C.F.R. §2510.3-101).3 Financier -  Financier is a person or financial institution engaged in the lending and management of money and makes a living participating in commercial financing activities.5 Finder -  A person who helps to arrange a transaction.3 First Stage Capital -  First stage capital is the money provided to entrepreneur who has a proven product, to start commercial production and marketing, not covering market expansion, de-risking, acquisition costs.9 First-round Financing -  First-round financing is the first investment in a company made by external investors.9 Flat Round -  An investment round in which the pre-money valuation of a startups' round is the same as its post-money valuation from the previous round.6 Flipping -  The act of buying shares in an IPO and selling them immediately for a profit. Brokerage firms underwriting new stock issues tend to discourage flipping and will often try to allocate shares to investors who intend to hold on to the shares for some time. However, the temptation to flip a new issue once it has risen in price sharply is too irresistible for many investors who have been allocated shares in a hot issue.3 Follow-on Investing -  (follow-up investing) This word refers to the event whereby investors reinvest in a company sometime during its development. Often times, follow-on investments occur when a company is not performing successfully as planned. Angel capitalists tend to avoid follow-on investments within the same company because of the high risk of additional monetary loss.4 A subsequent investment made by an investor who has made a previous investment in the company, generally a later stage investment in comparison to the initial investment.5 - Synonyms: follow-up investing Form 10-K -  This is the annual report that most reporting companies file with the Commission. It provides a comprehensive overview of the registrant’s business.3 Form 10-KSB -  This is the annual report filed by reporting “small business issuers.” It provides a comprehensive overview of the company’s business, although its requirements call for slightly less detailed information than required by Form 10-K.3 Form S-1 -  The form can be used to register securities for which no other form is authorized or prescribed, except securities of foreign governments or political sub-divisions thereof.3 Form S-4 -  Type of Registration Statement under which public company mergers and security exchange offers may be registered with the SEC.3 Form SB-2 -  This form may be used by “small business issuers” to register securities to be sold for cash. This form requires less detailed information about the issuer’s business than Form S-1. 3 Founder's Agreement -  A formal written agreement among the founders of a startup which documents the founder’s accord on ownership, roles and responsibilities, company governance / decision-making and operations. Issues such as founder contributions, vesting and exit / departure are also typically included in these Agreements. Founder’s agreements are typically shorter, less technical agreements between the founders that are to be developed further into operating agreements or corporate by-laws, as the concept and structure of the company develops. Operating agreements and corporate by-laws generally contain all of the same provisions typically included in a founder’s agreement.6 Founder's Stock -  The common stock owned by one or more of the company's founders, typically received when the company was incorporated and not purchased for cash.7  - Synonyms: Founder's Equity Founders’ Shares -  Shares owned by a company’s founders upon its establishment.3 Free cash flow -  The cash flow of a company available to service the capital structure of the firm. Typically measured as operating cash flow less capital expenditures and tax obligations.3 Friends & Family Round -  An investment in a company that often follows the founder's own investment, from people who are investing primarily because of their relationship with the founder rather than their knowledge  of the business.7 Friends and Family -  A common way for a startup to fund their initial round of capital. A 20-25% discount from the next round is appropriate. The valuation cap is going to vary depending on the size of the raise and the size of the opportunity.2 Full Ratchet Antidilution -  The sale of a single share at a price less than the favored investors paid reduces the conversion price of the favored investors’ convertible preferred stock “to the penny.” For example, from $1.00 to 50 cents, regardless of the number of lower-priced shares sold.3 Full ratchet is an investor protection provision which specifies that options and convertible securities may be exercised relative to the lowest price at which securities were issued since the issuance of the option or convertible security. The full ratchet guarantee prevents dilution, since the proportionate ownership would stay the same as when the investment was initially made.5 Fully Diluted Earnings Per Share -  Earnings per share expressed as if all outstanding convertible securities and warrants have been exercised.3 Fully Diluted Outstanding Shares -  The number of shares representing total company ownership, including common shares and current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.3 Fund Size -  The total amount of capital committed by the investors of a venture capital fund.3 Funding -  This term is used synonymously with the words “financing” and “capital.” It refers to the amount of money that is needed for a business endeavor. For example, a new business owner may seek a certain amount of funding for their startup company. This “raised” capital can be used to launch their endeavor as well as to sustain their company until monetary profit can be generated.4 Funding Platform -  Any online website used to facilitate investments in private companies.  As a defined term, a specific type of platform defined by the JOBS Act of 2012 that will allow non-Accredited investors to invest in private offerings.7 Fundless Equity Sponsors -  Fundless equity sponsors are sourcing and vetting deals without any committed capital, lining up financial sponsors on a deal-by-deal basis.9 GAAP -  Generally Accepted Accounting Principles. The common set of accounting principles, standards, and procedures. GAAP is a combination of authoritative standards set by standard-setting bodies as well as accepted ways of doing accounting.3 General Partner -  (GP) The partner in a limited partnership responsible for all management decisions of the partnership. The GP has a fiduciary responsibility to act for the benefit of the limited partners (LPs) and is fully liable for its actions.3  - Synonyms: GP General Solicitation -  When a private company publicly seeks investors in connection with an equity offering.  Previously prohibited by US securities law, now permissible under certain conditions according to the JOBS Act of 2012.7 Golden Handcuffs -  This occurs when an employee is required to relinquish unvested stock when terminating his employment contract early.3 Golden Parachute -  Employment contract of upper management that provides a large payout upon the occurrence of certain control transactions, such as a certain percentage share purchase by an outside entity or when there is a tender offer for a certain percentage of a company’s shares. This is discussed in more detail at the Executive Employment Agreement.3 Golden Rule -  The investor with the gold, makes the rules.  (The same meaning as "those who bring the money drive the bus"; i.e., forget whatever any previous contracts say, if you need money and only one source is willing to supply it, you'll take the money on their terms, period.)7 Grant -  Money provided by a government agency or other organization that does not need to be repaid and does not purchase equity.7 Holding Company -  A corporation that owns the securities of another, in most cases with voting control.3 Holding Period -  The amount of time an investor has held an investment. The period begins on the date of purchase and ends on the date of sale, and determines whether a gain or loss is considered short term or long term, for capital-gains-tax purposes.3 Home Run -  When a company has an exit that returns 20 or more times investors' initial capital.7 Honeypot -  A highly attractive offering used to entice a specific, targeted audience.6 Hot Issue -  A newly issued stock that is in great public demand. Technically, it is when the secondary market price on the effective date is above the new issue offering price. Hot issues usually experience a dramatic rise in price at their initial public offering because the market demand outweighs the supply.3 Hurdle Rate -  The internal rate of return that a fund must achieve before its general partners or managers may receive an increased interest in the proceeds of the fund. Often, if the expected rate of return on an investment is below the hurdle rate, the project is not undertaken.3 Illiquid -  An investment that cannot be readily sold or transferred into cash.  Unlike public stocks for which there is a ready market, angel investments are typically held for 5 to 10 years.7 Impact Investing -  Financial investments that also aim to have a benefit for society.7 In-Licensing Agreement -  Agreements with external or third parties under which the startup has been granted permission to utilize certain technologies owned by those third parties, under defined terms and conditions.6 Incubator -  An organization established to support the development of startup companies with intermediate term access, (1 - 3 years) to facilities, (office and lab space), resources and development programs, potentially including mentoring. Incubators differ from accelerators in that the latter typically focus on  acceleration of growth in a shorter defined period whereas the former is focused on the development of the company and its product over a longer time period.6 Information Rights -  A provision, typically found in Investors Rights Agreements which requires startup companies to provide board updates and financial information to minority shareholders on a periodic, (such as quarterly or yearly) basis.6 Initial Public Offering -  (IPO) The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During periods of market downturns or corrections, the opposite is true.3 (IPO) This is a private corporation’s first-time sale or allocation of a stock that is made available to the public. IPOs can be distributed to both young and established companies who seek to expand or warrant public trading.4 - Synonyms: IPO Institutional Investors -  Organizations that professionally invest, including insurance companies, depository institutions, pension funds, investment companies, mutual funds, and endowment funds.3 Institutional Investors refers mainly to insurance companies, pension funds and investment companies collecting savings and supplying funds to markets but also to other types of institutional wealth like endowment funds, foundations, etc.5 Intermediary -  Either a "Broker-Dealer" or a "Portal", both allowed by the JOBS Act to consummate a securities-based crowdfunding transaction.¹ Invention Assignment Agreement -  An agreement under which founders, employees, contractors, developers and others assign intellectual property rights to a company. Typically, these stakeholders or related parties of the company acknowledge that any and all intellectual property developed by them while working for or with the company, whether individually or jointly with other stakeholders, are the property of the company, not the individual. It can also apply to intellectual property that founders and others may contribute to a startup company at the time of its.