It is necessary to understand the basic terms of investment for effective risk management, increasing profitability, achieving financial independence and making informed decisions. This knowledge will help each of you adapt to changes in the market and be on the same wavelength with colleagues.
Below you will find terms that are in the dictionary of any investor.
Startups
Business model: A plan of how the company implements its business processes, what and how it creates and sells.
Co-founder: Co-founder of the company, one of several people who founded the business.
Option: Right, but not obligation, to buy or sell the company's shares at a predetermined price in the future.
Startup: A new company with a high degree of innovation and rapid growth ambitions.
Fundraising: The process of raising funds to finance a business or project.
Founder: Founder of the company.
Break-even point: The moment when the company's income becomes equal to its expenses.
Capitalization table: A table showing the company's capital structure, including shareholders' shares.
Cliff: A condition in the plan for the provision of options, according to which the employee does not receive the rights to shares before a certain period.
Customer development (custdev): The process of studying and understanding customer needs to create a popular product.
Decacorn: A company worth more than $10 billion.
Elevator pitch: A brief and capacious presentation of a business idea or project in a very short time, usually within 30-60 seconds.
Equity: Ownership share in the company, which is the residual value of assets after deduction of liabilities.
Executive summary: Summary of the key aspects of the business plan or project.
Exit: An investor's exit from the company, usually by selling his shares or through an IPO.
Founders agreement: An agreement between the founders defining their roles, responsibilities and shares in the company.
IPO (Initial Public Offering): Initial public offering of the company's shares on the stock market.
M&A (Mergers and Acquisitions): Processes of mergers and acquisitions of companies.
Minimum Viable Product: Minimally viable product, product version with minimal functionality for its testing in the market. In short MVP.
Pivot: A significant change in the startup's strategy to adapt to market conditions.
Post-money valuation: Valuation of the company after receiving external financing.
Pre-money valuation: Valuation of the company before obtaining external financing.
Traction: Indicators of growth and success of the project at the beginning of its development.
Unicorn: Unicorn - the cost exceeds $1 billion.
Value proposition: A unique value proposition explaining why consumers should choose a product or service of this company.
Vesting: The process of gradual acquisition of rights to shares or options for a certain period of time.
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Investment
Accelerator: A startup support program that provides mentoring, training, and resources to accelerate their growth and development.
Angel Investment: Early-stage startup funding provided by private investors, often called "angels."
Venture Capital (VC): Investments in early-stage projects with high growth and risk potential, made by venture capital funds.
Ideathon: An event where participants generate ideas and develop concepts for new projects or products.
Investment: Putting money into various assets with the goal of returning funds in a larger amount.
Incubator: A startup support program that provides infrastructure, mentoring, and resources to develop a business at the initial stages.
Corporate Accelerator: A startup support program organized by a large corporation to develop innovative projects that can be useful to the company.
Hackathon: An intensive event where teams develop prototypes of new products or solve specific problems in a limited time.
Bootstrapping: Self-financing of a startup using the founders' own funds and operating income without attracting outside investment.
Crowdfunding: Raising funds to finance projects and startups by attracting small investments from a sufficiently large number of people.
FFF (Friends, Family, Fools): Initial investors of a startup, who can be friends, family, or inexperienced investors.
Growth stage: The stage of a company's growth, when the business already has stable income and is looking for opportunities for further scaling.
Innovation office / outpost: A division of a company engaged in the search for and implementation of innovations, as well as interaction with startups and research centers.
Open Innovation Scouting: The process of finding and attracting external innovations and technologies for integration into the company.
Pre-seed: The earliest stage of startup financing aimed at developing an idea and creating a prototype.
Seed: Initial stage of startup funding aimed at product development, research, and market entry.
Series A: A funding round aimed at scaling the business, expanding the team, and increasing market share.
Series B: A funding round aimed at further scaling the business, expanding products, and entering new markets.
Series B: Раунд финансирования, направленный на дальнейшее масштабирование бизнеса, расширение продуктов и выход на новые рынки.
Documents
AFE-shares: Shares that grant holders the right to dividends or other privileges depending on the type of shares, but may have voting rights restrictions.
Convertible loan: A lope that can be converted into company shares under certain conditions, usually when an event occurs, such as the next round of financing.
SAFE: A contract under which investors receive the right to the company's shares in the next round of investment, without establishing the current valuation of the company.
Term Sheet: A document that describes the basic terms and conditions of a potential investment agreement or transaction.
Business metrics
Discount rate: The interest rate used to determine the current value of future cash flows when evaluating investment projects.
Amortization: The process of gradual write-off of the value of intangible assets or debt obligations for a certain time.
Assets - the company's assets: everything it owns and has a monetary value, including money, property, equipment and intellectual property.
Cash flow statement: Cash flow document for a certain period.
Free cash flow: Free cash flow showing the available funds for distribution among investors.
Gross revenue: The total revenue of the company from the sale of goods and services to the deduction of expenses.
IRR: An indicator reflecting the expected annual profitability of the investment project.
Liabilities: Liabilities of the company, including debts, loans and other financial obligations.
Net revenue: Net revenue, total income of the company minus refunds, discounts and other adjustments.
P&L statement: Profit and loss statement for a certain period.
ROI: An indicator that measures the return on investment.
Use investor terms every day!
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