Glossary
No results found.
A
Growth framework used to track key stages of the customer lifecycle, helping businesses focus on the right metrics. The acronym stands for Acquisition, Activation, Retention, Referral and Revenue and is often called the "Pirate Metrics" because of what it sounds like.
Read more
Difference between the actual return of an investment and the expected return, often based on a benchmark or a model like the Capital Asset Pricing Model (CAPM). Essentially, it measures how much better or worse an asset performed compared to what was anticipated given the risk involved.
Read more
Refers to external risks like political, regulatory, social, or economic factors that impact a business. These risks come from outside forces rather than the production process itself.
Read more
Measures how much higher a product's price is compared to other available alternatives.
Read more
Form of vesting that occurs more quickly than outlined in a company’s stock option plan. This provision allows employees or investors to gain ownership of their equity or stock options earlier, providing them with monetary benefits sooner.
Read more
Structured programs designed to support entrepreneurs with mentorship, essential guidance, and training. Typically lasting a set duration, these programs often conclude with a pitch event, allowing startups to present their ideas to potential investors and expedite their growth.
Read more
A short-term liability representing a company's unpaid bills for goods or services. It's money owed to suppliers and is recorded as a liability on the balance sheet.
Read more
Money owed to a company by its customers for goods or services provided. It's a short-term asset on the balance sheet, representing future payments.
Read more
An individual who meets the legal financial requirements to invest in certain business ventures, typically higher-risk opportunities like private equity or hedge funds.
Read more
Refers to the gradual increase in the value of an asset or investment over time due to growth, interest, or the natural accumulation of value.
Read more
Contractual safeguard that shields an investor from experiencing a substantial decrease in their investment’s ownership percentage during subsequent rounds of fundraising aka when other investors buy stock in a company.
Read more
B
Rate at which the company is spending its capital/cash to cover operating expenses before reaching profitability; calculated on a monthly basis.
Read more
C
A document that provides a detailed breakdown of company’s ownership structure, outlining the equity ownership stakes of shareholders, including investors, founders, and employees.
Read more
Also known as retention rate, the churn rate is a metric that measures the percentage of customers or subscribers who discontinue using a service or product over a given period versus the ones that start.
Read more
Employee stock options typically undergo vesting over a span of several years, meaning they can only be fully converted into stock after this duration.
Read more
The fundamental ownership unit in a company, usually held by founders and employees. Early angel investors may also hold common stock. However, institutional external investors, especially VCs, typically demand preferred stock with added rights, notable priority in a liquidation event.
Read more
An irreversible process of converting preferred share to common shares.
Read more
Type of loan that can turn into ownership in a company when there’s another funding round, offering a straightforward way for startups to get early-stage funding. Investors who use convertible notes usually get a share in the company when it raises more money, based on a set formula or discount. *Discounted convertible note
Read more
Total expense a business spends to acquire a new customer.
Read more
Predicted total revenue business anticipates earning from a customer throughout their entire relationship, reflecting the long-term value and profitability of that customer.
Read more
D
Reduction of existing shareholders’ ownership percentage in a company when additional shares are issued, typically through fundraising rounds.
Read more
Funding round in which a company raises capital at a valuation lower than its previous financing, often resulting in a dilution of existing shareholders.
Read more
Provisions in shareholders’ agreement that empower majority shareholders to force minority shareholders to join in the sale of a company, ensuring a unified decision in favour of a potential buyer.
Read more
Comprehensive investigation and evaluation process conducted by potential investors or acquirers to assess the financial, legal, and operational aspects of a business before making an investment or acquisition decision.
Read more
E
Financial metric that measures a company's core profitability by excluding non-operating expenses (interest and taxes) and non-cash items (depreciation and amortization).
Read more
Benefit plan that allows employees to become partial owners of the company by receiving shares of its stock, fostering employee engagement and aligning their interests with company performance.
Read more
Ownership stake that investors receive in a company in exchange for their investment.
Read more
F
Occurs when startup issues shares at the same post-money valuation as its previous fundraising round.
Read more
Total number of outstanding shares company would have if all potentially dilutive securities, such as stock options, restricted stock units, and convertible securities, were converted or exercised.
Read more
L
A provision in a contract specifying the order of payment to investors in the event of a company’s liquidation or sale, often prioritizing investors over founders.
Read more
Predetermined length of time, often imposed on company insiders and early investors, during which they are restricted from selling or trading their shares following an IPO to prevent sudden stock volatility.
Read more
P
External investors, especially VCs, typically demand preferred stock with enhanced rights compared to common stock, the fundamental ownership unit in a company.
Read more
Clause in a term sheet that grants investors the option to maintain their ownership stake by participating in future funding rounds.
Read more
R
Yearly forecast of revenue derived from current revenue figures.
Read more
Often granted in VC deals, giving priority to the startup and then the investor in any future stock sale.
Read more
Financial metric that calculates the amount of time a startup can sustain its operations with the current level of available funds before exhausting its financial resources, often expressed in months.
Read more
S
When an investor purchases shares from an existing shareholder rather than from the company directly through an issuance of stock.
Read more
T
While warrants in equity funding rounds often introduce unnecessary complexity, they play a vital role in bridge loan and venture debt agreements.
Read more
Non-binding document outlining the key terms and conditions of a potential investment or acquisition, serving as a basis for negotiation between parties involved.
Read more
V
W
Similar to stock options, issued to investors. While warrants in equity funding rounds often introduce unnecessary complexity, they play a vital role in bridge loan and venture debt agreements.
Read more
