Compiled by Karthikeyani M., Associate – Incubation at SSN iFound
Pre-Launch Stage of Startup
- Founder’s Agreement: A legal document outlining the roles, responsibilities, and equity distribution among startup founders.
- Pre-Seed Stage: The earliest stage of funding when you’re seeking initial capital to take your startup from concept to development.
- Due Diligence: The process of investigating and assessing the potential risks and benefits of an investment, often conducted by investors before funding.
- Convertible Note: A type of short-term debt that can convert into equity in the future, often used in early-stage fundraising.
- Cap Table (Capitalization Table): A document that outlines the ownership and equity structure of your startup, including investors, founders, and employees.
- Pre-Money Valuation: The estimated value of your startup before it receives external funding.
- Post-Money Valuation: The estimated value of your startup after external funding has been added.
- Lead Investor: The primary investor who negotiates terms and often provides the largest portion of the funding in a round.
- Convertible Debt: A type of financing where a startup borrows money with the understanding that it will be converted into equity in the future.
- Equity Stake: The percentage of ownership in a startup that an investor receives in exchange for their investment.
- Accredited Investor: An individual or entity that meets specific financial criteria and is allowed to invest in private securities offerings.
- Bridge Loan: A short-term loan used to provide financing until more permanent funding can be secured.
- Burn Rate: The rate at which a company uses its cash reserves to cover operating expenses before generating positive cash flow.
- Convertible Equity: A form of investment where investors receive equity in the company, typically in a later stage of fundraising.
- Convertible Loan Agreement: A short-term debt that can be converted into equity at a later date, often used in early-stage funding rounds.
- Crowdfunding: Raising small amounts of money from a large number of people, typically via online platforms, to fund a startup or project.
- Deal Flow: The rate at which investment opportunities, such as startups seeking funding, flow through an investor’s network.
- Dilution: The reduction in the ownership percentage of existing shareholders when additional shares are issued, often due to new investment rounds.
- Down Round: A funding round in which a company’s valuation is lower than the previous round, resulting in a lower share price for existing investors.
- Equity Financing: Raising funds by selling shares or equity in the company to investors, diluting the ownership of existing shareholders.
- Initial Public Offering (IPO): The first sale of a company’s shares to the public, allowing it to be traded on a stock exchange.
- Liquidity Event: A situation where startup investors can cash out their investments, such as through an acquisition or IPO.
- Private Equity: Investments made in private companies, often involving venture capital and buyout firms.
- Runway: The period of time a startup can operate before running out of funds, based on its current burn rate and available cash.
- Series A Funding: The first significant round of funding after the seed stage. It is used to scale the business, expand operations, and grow the customer base.
- Term Sheet: A document outlining the key terms and conditions of an investment deal between a startup and investors.
- Valuation: The estimated monetary value of a startup, used to determine the price per share during fundraising.
- Vesting: A process by which founders and employees earn ownership of their shares over time, often to incentivize long-term commitment to the startup.
- Working Capital: The capital used by a company to cover its day-to-day operational expenses.
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