Acqui-hire
Purchase of a company with the primary purpose to hire its employees, rather than for the value of the business.

Acquisition
When one company buys a controlling stake in another company. Can be friendly (agreed upon) or hostile (no agreement).

Advisory Board
A group of external advisors in an investment company within a Board of Directors.

Agile
A software development that is based on incremental development and focuses on adaptability and collaboration.

Alpha Test
A pre-production product testing within a company with the aim to identify its design deficiencies and functional flaws.

Angel investor
A wealthy individual who provides a small amount of capital to an early stage startup for a share of the company and often precedes a Seed Round.

Anti-dilution protection
An anti-dilution protection ensure that an investor is protected from later issues of stock at a lower price than the investor originally paid. The investor may have preemptive rights to purchase new stock at the new share price.

ARR (Annual Recurring Revenue)
The recurring subscription-based revenue received annually by SaaS (Software as a Service) and PaaS (Platform as a Service) companies.

B2B (Business to Business)
A business that sells its product or services to other businesses. B2B technology is also known as Enterprise Technology.

B2C (Business to Consumer)
A business that sells its products or services directly to its customers.

Benchmark
A standard or point of reference for a startup company to measure its current success in comparison to the industry standard. Investors use certain benchmarks to evaluate a company's growth.

Board of directors
A group of people at the top of the company that are chosen by stockholders to manage the company affairs. It often includes investors and mentors, who hold a seat in exchange for an investment in a company.

Bootstrapped
A company is bootstrapped when an entrepreneur funds the company with personal resources or the company's own revenue.

Bridge loan/Convertible notes
A type of a loan or convertible debt lent to the company that will later be converted at a later valuation to equity/shares of stock in the company at a particular price. It allows a young company to delay a valuation when raising investment in early stages. SAFE loans are a form of convertible debt with friendly terms for the founders.

Budget
An estimate of income and expenditure for a set period of time often in the future that is reviewed on a regular basis.

Burn Rate
The rate at which a company is spending the amount of cash over a certain period of time. It is typically expressed in monthly terms.

CAC (Customer Acquisition Costs)
The cost incurred by the company to convince a potential customer to purchase a product or service. In addition to the product cost, it also includes research, marketing and accessibility costs

Cap
A convertible note cap agreed between entrepreneurs and investors that sets a maximum valuation at which the investment made via the convertible note should convert into equity. This means that when the convertible note converts to equity, the evaluation of the company will not be higher than the agreed cap.

Capital
Money that entrepreneurs raise to start a company and create new products and services.

Capital under management
The amount of money or assets that a venture firm is managing and investing.

Capitalisation Table
A table showing the number of shares or units owned by each investor in a company, which usually incudes founders' equity, investors' equity and employees' option pool.

Common Stock
A form of equity ownership of a company (also called voting share or ordinary share). It has lower claims on earnings and assets than preferred stock. In the event of liquidation or a bankruptcy common stockholders are the last to claim rights to assets of a company after the full amounts are paid to bondholders, creditors and preferred stockholders first, therefore it is riskier to own. Common stock usually allows owners to vote on particular points, such as electing the board of directors.

Corporate Venture
An investment made by a company into another company mostly at an early stage for strategic reasons.

Crowdfunding
A modern way of raising finance for a new venture where many investors (aka crowd) collect investment in small amounts, instead of more traditional way where a small group of people invest large amounts of money.

DAU (Daily Active Users)
Unique website users who use your website to buy your products or services on a given day.

Dilution
Dilution happens when the percentage ownership of a shareholder is reduced in value, or diluted by issuing more new shares in a company.

Disruption innovation
Disruption innovation is a technology that disrupts an existing market by doing things in a new way such as forcing out an old technology, changing the market habits, audiences or challenging the prices in the market.

Down round
When the valuation of a company during a financing round of capital funding is lower than its valuation at the end of a previous round

Due diligence
An analysis made by an investor by collecting all the facts and figures of a new investment such as reviewing financial records and calculating potential return on investment. Due diligence would also include
- market analysis with customer feedback and market sizing
- technology ins and outs
- founders information with references and interviews
- legal and financial analysis

Elevator Pitch
A short presentation, up to a minute in length, explaining the business model, concept with problem solution, go-to-market strategy and value proposition, presented by the entrepreneur to potential VC investors and angels in order to grab their attention and get them interested to learn more about the opportunity.

Enterprise
A company or business which has more than 1,000 employees and £1B in annual sales.

Entrepreneur
An individual who starts a business venture, taking on financial risks in the hope of profit or reward.

Equity financing
The process of raising capital by selling shares in the company to investors. Venture capital funding and IPO are both forms of equity financing.

Employee stock ownership
An employee benefit plan that enables employees to own part or all of the company they work for by owning a certain number of shares at fair market value. Shares mature over a period of time and are served as an incentive for employees to build long-term value for the company. Employee stock ownership is a form of equity compensation.

Exit
A strategy by investors and entrepreneurs to sell their shares and "exit" their investment in the company via initial public offering (IPO), strategic acquisition or management buyout by another company or investor. Exit strategy is typically set up by entrepreneurs and investors in early stages of the company.

Flat round
A funding round where the company's valuation remains the same as the previous round.

Incubator / Accelerator
Private organisations that support entrepreneurs in developing their businesses, especially in initial stages in return for profit and help to speed up the growth and success of start-ups and early stage companies. They provide work space, administrative services, mentorship opportunities, technological and business advice, legal and regulatory guidance, business education classes and community networking events in exchange for equity in the company. Their goal is to turn innovative ideas that are in a very early stage and extremely risky for private investments into viable startup companies.

Initial public offering (IPO)
A private company turns into a public company with shares in the company are offered on a securities exchange or to the general public.

Lead investor
An organisation or individual investor who leads a funding round and serves as a link between a group of investors and fund-raising company. The lead investor typically also invests in that round.

Liquidation preference
A clause in a venture capital contract that specifies the payout order in case of a corporate liquidation, such as the sale of the company. It outlines which investors get paid first and how much they get paid in the event of a liquidation.

Monthly Active Users (MAU)
The number of unique users who engage with a website's products and services in a given month.

Milestones
Specific financial or business goals that the company targets in a period of time and could be used by VCs to determine whether to keep financing the company or not.

Monthly Recurring Revenue (MRR)
Income that a company expects to receive on a monthly basis.

Non-disclosure agreement (NDA)
A legally binding contract established between different parties that protects sensitive or confidential information, such as trade secrets, from being shared with outside parties.

Oversubscription
When a deal is in great demand because of the company’s growth potentials, the demand for company's shares may exceed the supply or the number of shares available for sale.

Platform as a Service (PaaS)
A cloud computing model that delivers hardware and software tools to users over the internet to allow them to develop, operate and manage app functionalities without the need to develop the underlying infrastructure.

Pay-to-play provisions
A pay-to-play provisions require investors to participate in subsequent financing rounds on a pro rata basis. If an existing investor doesn't invest when required, they will lose some or all privileges such as anti-dilution protection to having their preferred stock converted to common stock, liquidation preferences or certain voting rights

Pivot
Occurs when a startup breaks its core focus and quickly changes direction with its business strategy. It can happen early on in a company's life or after several rounds of funding.

Proof of concept (POC)
A basic demonstration that a concept or idea that a startup is working on can become a reality and scalable with profit potential. Many investors need to see proof of concept in order to invest in a startup. In B2B, it could be feedback from potential clients. In software engineering, a prototype of the product/MVP (minimum viable product). In the retail, you need to show initial traction and growth with consumers.

Portfolio company
A company or entity in which a venture capital firm invests and is part of that firm's portfolio.

Post-money valuation
When the financing round and terms are finalised, the post-money valuation equals to the value of the company’s equity or the pre-money valuation plus the amount of funding raised.

Pre-money Valuation
Refers to how much a company’s equity is worth or the valuation of a company prior to raising capital in a round of financing.

Preferred stock
A form of equity ownership of a company with stockholders having a higher claim on its assets and earnings than common stock. Preferred shares usually pays fixed dividend before dividends to common shareholders. Shares usually do not have voting rights and has the potential to appreciate in price.

Pro rata rights
Represents an investment agreement between an investor and a company, where the company gives the investor the right (but not the obligation) to participate in one or more future financing rounds to maintain their percentage stake in the company.

Reverse vesting
An agreement that founders of a company will give back some of company shares they own if they decide to leave the company before a specific date.

Right of first refusal
A contractual right giving its holder the option to enter into a business transaction before others can, such as shareholders may have the right to purchase additional shares issued by the company first.

Return on investment (ROI)
An approximate measure of an investment's profitability, which calculates the amount of return on an investment relative to the investment’s cost. To calculate ROI: the return of an investment is divided by the cost of the investment and the result is expressed as a percentage, which allows ROI to be easily compared and measured against returns from other investments.

Round
Funding in individual rounds that a startup receives from private equity investors or venture capitalists depending on the stage of the company. Funding rounds are the number of times a startup goes back to the market to raise more capital. The first round is usually a Seed round followed by Series A, B, C and so on rounds.

Runway
Refers to how long a startup can keep operating or survive before it runs out of money. It is measured by the amount of cash in the bank divided by the burn rate.

Software as a Service (SAAS)
A cloud based software delivery model that allows users to access software applications over the internet and typically be charged on a subscription basis.

Simple Agreement for Future Equity (SAFE)
A financing contract developed by Y Combinator that may be used by an early stage company to raise capital in its seed financing rounds. It provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment.

Sector
An area of the economy in which startups and businesses operate and share the same or related business activities, products or services. Examples: FinTech, HealthTech, Consumer Electronics and SaaS technology. Venture capital firms typically invest in specific related sectors, where they have extensive experience, knowledge and expertise.

Seed
The seed round or stage is the first financing round for a startup, where a company raises money to built a prototype or to prove a concept.

Series
A specific round of financing that a company is raising, which follows a Seed round and distinguished by a letter e.g. Series A, Series B, Series C and so on.

Small Medium Business (SMB)
A number of employees and annual revenue define business size. Small businesses are usually organisations with fewer than 50 employees and less than or equal to €10 million in annual revenue, while medium enterprises are those organisations with less than 250 employees and less than or equal to €50 million.

Stage
The stage of a startup company’s growth and development tend to be categorised as seed stage, early stage, mid-stage or growth stage and late stage. Typically VC firms only invest in specific stages.

Startup
A young company in the early stage of operation and founded to develop a unique product or service that solves a problem or fills a need.

Term sheet
A non-binding agreement outlining the basic terms and conditions of a potential business agreement under which an investment will be made. It is later used to produce a detailed legal document.

Up-round
A round of financing in which a company's worth increased since its previous valuation at the previous round.

Valuation
The analytical process of determining the current (or projected) worth or value of an asset or a company.

Venture capital
A form of private equity and a type of financing that investors provide to startup companies and small businesses with long-term growth potential. By taking high risks, venture capitalists typically involved in company decisions.

Venture capitalist
A private equity investor that provides capital to companies with high growth potential in exchange for an equity stake. Venture capitalists typically choose a specific market or sector that they know well and invest in.

Venture Lending (debt financing)
A type of loan offered and backed by venture capitalists that is designed specifically for early-stage, high-growth companies where the debt will be repaid with interest and/or equity.

Vesting
The process of earning an asset, like stock options or employer-matched contributions over time. It is usually offered to people over a fixed period of time to give them an incentive to work for the company. For example, they would earn 25% of their stock each year over a four year period. If they leave early, the unvested part of their stock is returned back to the company.

Vesting Schedule
An incentive programme or a reward system by a startup for its employees that gives them benefits such as company shares after they have contractually fulfilled a certain number of years with the company.

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