Venture Capital Startup Dictionary

I graduate from college with an engineering degree. I knew virtually nothing at all about dollars or the economy or finance. Then I went to company college. (Okay, I worked for a couple of years in involving.) About half-way by way of my very first year, I realized that I had spent my whole life figuring out nothing at all about what produced the planet go 'round. No, not appreciate (no appreciate at b-college). Funds!

Most importantly, I discovered that you can system Excel spreadsheet six techniques to Sunday, but if you cannot speak the language of dollars, no 1 will take you seriously. So I began on a mission to discover how folks speak about dollars like watching films like Wall Street, reading books like Barbarians at the Gate (also a film) and Liar's Poker.

Of course, lots of years later, I've forgotten what I did not know, and I neglect that entrepreneurs normally have good suggestions, but do not have the finance language for moving by way of the investment planet. So right here are a couple of standard definitions when you are hunting for dollars.

Investor – a person who exchanges dollars for a share of your firm.

Angel – an person who invests a decent chunk of dollars in your firm ($100-500K) in exchange for some ownership. They have a tendency to be entrepreneurs who have produced it major themselves and are normally significantly less demanding and interfering than venture capitalists. (This is not generally correct, by the way.)

Venture Capitalist – a particular person who is a companion in a venture capital (VC) firm who assists locate, choose, and handle investments produced by the VC firm. In basic, VCs get their dollars from restricted partners (these can be any one from wealthy investors to corporations to pension funds). The restricted partners do not have a say in the investments.

Associate – a junior particular person at the VC firm who holds no energy, but will arrogantly act like they do. If you invest a lot of time with an associate, you are almost certainly wasting it.

Principal – a associate whose been promoted. The energy of this particular person depends on the firm. Nonetheless not a choice maker, but can blackball you.

A single Pager – a 1 web page (commonly front and back) describing your firm. Incorporates some history, mini financials, management description, item description, and company method. Your company strategy in miniature.

Executive Summary – like the 1 pager, but a tiny longer. Your abbreviated company strategy.

Your Enterprise Strategy – a 20-30 web page document that will only be study by the associate. It nonetheless has to be very good even though or they will believe your not taking this seriously.

Pitch Deck – otherwise recognized as a presentation (see I told you the lingo was various). Typically a Powerpoint presentation that you use when you present to the VCs. If they are truly interested, you almost certainly will not get previous the very first couple slides. Make these slides count! I graduate from college with an engineering degree. I knew virtually nothing at all about dollars or the economy or finance. Then I went to company college. (Okay, I worked for a couple of years in involving.) About half-way by way of my very first year, I realized that I had spent my whole life figuring out nothing at all about what produced the planet go 'round. No, not appreciate (no appreciate at b-college). Funds!

Most importantly, I discovered that you can system Excel spreadsheet six techniques to Sunday, but if you cannot speak the language of dollars, no 1 will take you seriously. So I began on a mission to discover how folks speak about dollars like watching films like Wall Street, reading books like Barbarians at the Gate (also a film) and Liar's Poker.

Of course, lots of years later, I've forgotten what I did not know, and I neglect that entrepreneurs normally have good suggestions, but do not have the finance language for moving by way of the investment planet. So right here are a couple of standard definitions when you are hunting for dollars.

Investor – a person who exchanges dollars for a share of your firm.

Angel – an person who invests a decent chunk of dollars in your firm ($100-500K) in exchange for some ownership. They have a tendency to be entrepreneurs who have produced it major themselves and are normally significantly less demanding and interfering than venture capitalists. (This is not generally correct, by the way.)

Venture Capitalist – a particular person who is a companion in a venture capital (VC) firm who assists locate, choose, and handle investments produced by the VC firm. In basic, VCs get their dollars from restricted partners (these can be any one from wealthy investors to corporations to pension funds). The restricted partners do not have a say in the investments.

Associate – a junior particular person at the VC firm who holds no energy, but will arrogantly act like they do. If you invest a lot of time with an associate, you are almost certainly wasting it.

Principal – a associate whose been promoted. The energy of this particular person depends on the firm. Nonetheless not a choice maker, but can blackball you.

A single Pager – a 1 web page (commonly front and back) describing your firm. Incorporates some history, mini financials, management description, item description, and company method. Your company strategy in miniature.

Executive Summary – like the 1 pager, but a tiny longer. Your abbreviated company strategy.

Your Enterprise Strategy – a 20-30 web page document that will only be study by the associate. It nonetheless has to be very good even though or they will believe your not taking this seriously.

Pitch Deck – otherwise recognized as a presentation (see I told you the lingo was various). Typically a Powerpoint presentation that you use when you present to the VCs. If they are truly interested, you almost certainly will not get previous the very first couple slides. Make these slides count!

Term-sheet – a non-binding provide of the terms below which the VC is prepared to invest (see Components of a Term-sheet).

Pre-Funds Valuation – what the VC thinks your firm is worth prior to their investment. This will be various than what you believe it is worth (see Valuation (for a Venture Capital Investment)).

Post-Funds Valuation – what your firm was worth ahead of the investment (Pre-Funds) plus the investment. Your pre-dollars was $five million, the investment is $five million. Your post-dollars valuation is $10 million and the VC owns half.

Nicely, this is a decent list to get started. If I believe of other VC terms needing defining that are not otherwise defined on the web site, I will add them right here.

Very good luck. Term-sheet – a non-binding provide of the terms below which the VC is prepared to invest (see Components of a Term-sheet).

Pre-Funds Valuation – what the VC thinks your firm is worth prior to their investment. This will be various than what you believe it is worth (see Valuation (for a Venture Capital Investment)).

Post-Funds Valuation – what your firm was worth ahead of the investment (Pre-Funds) plus the investment. Your pre-dollars was $five million, the investment is $five million. Your post-dollars valuation is $10 million and the VC owns half.

Nicely, this is a decent list to get started.

Very good luck.

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