Term
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Definition
| A program intended to mentor and accelerate the growth and success of a startup company. |
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Definition
| person who is permitted to invest in strart-ups and other high risk private company securities |
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Definition
| a transaction between two companies where one is buying the other |
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Term
| adverse change redemption |
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Definition
| a type of redemption right whereby a shareholder gets the right to redeem his shares if something adverse happens to the company |
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Definition
| people who advise startup companies |
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Definition
| a very junior person at a VC firm, often a college graduate |
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Definition
| an individual who provides capital to a startup company. The person is usually independently wealthy and invest his/her own money in the company. |
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Definition
| a term that provides price protection for investors. This is accomplished by effectlivy repricing an investors shares to a lower price per share in the event that the company completes a financing at a lower valuation than a previous round financing. |
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Term
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Definition
| looking at the equity base of the company assuming that all the preferred stock has been converted to common |
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Term
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Definition
| a person at a VC firm who is involved in deal analysis and management. the seniority of this position varies by firm, but generally associated need partner to support their activities. |
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Definition
| an employee who does not have an employment agreement and can be terminated by the company for any reason |
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Term
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Definition
| the price at which a stock option may be exercised |
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Definition
| the price at which a stock option may be exercised |
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Term
| best alternative to negotiated agreement (BATNA) |
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Definition
| a backup plan if no agreement is reached between two parties |
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Definition
| when all classed of preferred stock have equivalent payment rights in a liquidation |
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Term
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Definition
| a loan given to a company by investors with the intent that the money will fund the company to the next equity financing. |
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Definition
| the denominator in weighted average antidilution calculations that takes into consideration a fully diluted view of the company. The opposite is called a narrow-based antidilution. |
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Term
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Definition
| the valuation ceiling that exists in a convertible debt deal |
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Term
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Definition
| the method by which a VC fund asks its investors to contribute their pro rata portion of money being called by a VC fund to make investments, pay expenses, or pay management fees. |
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Definition
| the profits that VCs are entitled to after returning capital committed to their investors. This typically ranges from 20 to 30% |
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Term
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Definition
| the concept whereby shareholders agree to give a preferential payment (usually to executives and employees of a company) ahead of the shareholders agreeing to the carve-out. Normally, one would see a care-out used in the situation where liquidation preferences are such that employees of the company to not have enough financial interests in a liquidation event. |
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Term
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Definition
| within the merger context, these are certain representations and warranties that will be indemnified outside of the escrow |
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Term
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Definition
| the provision in the limited partnership agreement that allows investors to take back money from the VC should they overpay themselves with carry. |
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Term
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Definition
| the length of time a VC fund has to find and invest in new companies, usually five years. |
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Term
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Definition
| the type of stock that has the lease amount of rights, privileges, and preferences. Normally employees and founders of a company hold common stock, as the price they pay for the stock can be much less than that of preferred stock |
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Term
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Definition
| terms that allow a VC expert positive or veto control in a deal |
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Term
| conversion price adjustment |
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Definition
| the mechanism by which an intidilution adjustment takes place. this alls the preferred stock to be converted into more common stock that originally agreed upon and thus allows the preferred to own more stock and voting rights upon converting to common. |
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Term
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Definition
| a debt or loan instrument that an investor gives to a company with the intent that it will convert later to equity and not be paid back as a standard bank loan would be |
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Term
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Definition
| when a VC firm operates more than one fund and more than one fund invest in the same company. |
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Term
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Definition
| a junior deal partner at a VC firm |
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Term
| double-trigger acceleration |
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Definition
| a term that describes the situation in which a person would receive accelerated vesting. In double-trigger situation, two events would trigger accelerated vesting, such as a merger of the company followed by a termination of a persons employment. |
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Definition
| a financing round that is at a lower valuation than the previous round. |
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Definition
| a term that sets up a proxy on one's stock ownership to vote the same way as others do on a particular issue |
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Term
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Definition
| the process by which investors explore a company that they are thinking of investing in. |
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Term
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Definition
| an amount agreed upon by the acquirer and a target company that the former shareholders of the target company will get if certain performance milestones are met post merger. |
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Term
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Definition
| terms that impact the return of a VC's investment in a company |
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Term
| elevator pitch employee pool |
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Definition
| the shares set the shares set aside by a company to provide stock options to employees |
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Term
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Definition
| someone who creates a new company, also known as a startup |
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Term
| entrepreneur in residence (EIR) |
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Definition
| a pa person at a venture firm that is usually a formor entreprenuer who is helping out the venture firm finding deals to invest in, or working on his next company that the venture firm will one day fund. |
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Term
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Definition
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Term
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Definition
| the amount of consideration that an acquiring company holds back following a merger to make sure that representations and warranties made by the purchased company are true |
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Term
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Definition
| the amount of money in a merger that is set aside to remedy breaches of the merger agreement. |
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Term
| executive managing director |
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Definition
| a senior partner in a VC firm who is superior to a managing director or general partner |
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Term
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Definition
| a short summary document, normally one to three pages, that describes material facts and strategies of a company |
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Term
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Definition
| the act of purchasing stock pursuant to a stock option or warrant |
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Term
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Definition
| the price that a third party would pay for something in the open market |
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Term
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Definition
| a legal and ethical duty that an individual has to an entity. |
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Term
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Definition
| a financing round done at the same postmoney valuation as that of the previous round. |
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Term
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Definition
| someone who creates a new company, also known as a startup |
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Term
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Definition
| a senior partner in a VC firm who founded the firm. |
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Term
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Definition
| a term explicitly defining that all rights to purchase equity should be in the valuation calculation. |
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Term
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Definition
| the concept that one's actions depend on what actions other persons may or may not take and the inherent incentives behind these actions |
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Term
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Definition
| a senior partner in a VC firm |
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Term
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Definition
| the entity that manages the limited partnership |
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Term
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Definition
| the amount of money, usually between 1% and 5% of the fund, that the general partners invest in their own fund. |
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Term
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Definition
| the amount of consideration that an acquiring company holds back following a a merger to make sure that representations and warranties made by the purchased company are true. |
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Term
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Definition
| the promise by one party to protect another party should something go wrong |
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Term
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Definition
| the length of time that a VC fund can remain active, typically 10 years with two one-year extensions |
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Term
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Definition
| contractual provision within the limited partnership agreement that describes what will happen if certain partners leave the VC fund |
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Term
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Definition
| the investor in a startup company who takes on the leadership position in a VC financing |
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Term
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Definition
| a term sheet for a merger |
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Term
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Definition
| a version of a preferred stock financing that has very simple and watered-down terms. |
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Term
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Definition
| the investors in a VC fund |
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Term
| limited partnership agreement (LPA) |
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Definition
| the contract between a VC fund and its investors |
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Term
| liquidation event/liquidity event |
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Definition
| when a company is sold and ceased to exist as a stand alone basis |
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Term
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Definition
| a right given to a class of preferred stock allowing that stock to receive proceeds in a liquidation in advance of other classes of stock |
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Term
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Definition
| a concept used in VC financings that allows a company to distinguish between shareholders who want to purchase more stock than others |
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Term
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Definition
| the entity that services each fund that a VC raises |
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Term
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Definition
| the fee that the VC funds have a right to recieve from their LPs as moeny to manage their business operations regardless of the performance of the funds. |
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Term
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Definition
| a senior partner in a VC firm |
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Term
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Definition
| inserting the word material in from of things such as protective provisions. |
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Term
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Definition
| people who advise startup companies or their executives. Normally these people are not paid. |
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Term
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Definition
| a super angel who raises a small fund made up of professional investors |
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Definition
| a term in game theory which deals with a game or situation where there is a continuing relationship after the game is played, like a VD financing whereby after the transaction is completed the VC and the entrepreneur will join forces to work together. |
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Term
| nondisclosure agreement (NDA) |
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Definition
| an agreement whereby one party promises not to share information of another party |
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Term
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Definition
| a position at a VC firm that is normally under managing director, but above principal |
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Term
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Definition
| the amount of options a company plans to allocate to employees over a finite time period |
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Term
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Definition
| The shares set aside by a company to provide stock options to employees |
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Term
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Definition
| when all classes of preferred stock have equivalent payment rights in a liquidation |
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Term
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Definition
| a term that forces VCs to contunue to invest in future company financings or suffer adverse consequences to their ownership positions |
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Term
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Definition
| the value of a company after an investor has put money into the cocmpany |
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Term
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Definition
| a type of stock that has preferential terms, rights, and privileges compared to common stock |
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Term
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Definition
| the value ascribed to a company by an investor before investing in the company |
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Term
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Definition
| the dollar amount assigned to purchase one share of stock |
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Term
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Definition
| a junior deal partner at a VC firm |
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Term
| private placement memorandum (PPM) |
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Definition
| a long legal document that is prepared by the company, its bankers, and its lawyers that is long-form business plan created to solicit investors |
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Term
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Definition
| the right of a shareholder to purchase shares in a future financing equal to the percentage the shareholder currently holds at the time of such financing |
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Term
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Definition
| contractual rights that allow the holders of preferred stock to vote on certain important matters pertaining to a company. |
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Term
| ratchet-based antidilution |
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Definition
| a style of antidilution that reprices an investor's shares in previous rounds, usually through a conversion price adjustment, to the price paid in the current round |
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Term
| representations and warranties |
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Definition
| provisions in a financing purchase agreement or merger agreement whereby the company makes certain assurances about itself. |
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Term
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Definition
| the amount of money that a VC firm allocates on its books for future investments to a particular |
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Term
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Definition
| the situation in which stock is returned to a company by departed employees whose stock has not vested, thus increasing the effective ownership of all shareholders in a company |
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Term
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Definition
| the right of shareholders to force the company to buy back their stock, usually given to people who were not supposed to buy the stock in the first place under federal securities law. |
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Term
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Definition
| a legally defined way of escaping liability under a law if a party performs certain acts as defined by such law. |
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Definition
| the sale by a VC of stock in a portfolio company or its entire portfolio to an outside party in a private transaction |
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Term
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Definition
| same as a light preferred: a simple watered-down version of a preferred stock financing |
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Term
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Definition
| a startup that is in its infancy |
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Term
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Definition
| the first or early round of financing that a company raises |
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Term
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Definition
| a small financing that occurs before the series A financing and is often the very first financing of a company |
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Term
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Definition
| a term in game theory that deals with a game or situation in which there is no continuing relationship after the game is played. |
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Term
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Definition
| when different classes of preferred stock have senior rights to payment over other classes of preferred stock |
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Term
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Definition
| a right to purchase shares of stock in a company |
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Term
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Definition
| the price at which a stock option may be exercised. |
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Term
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Definition
| a very active and experienced angel investor |
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Term
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Definition
| the right of shareholders to purchase shares in the future financing equal to some multiple of the percentage they currently hold at the time of such financings |
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Term
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Definition
| the group of investors who invest in a startup |
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Definition
| a summary document of key terms in contemplation of a financing |
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Definition
| the value ascribed to a company by an investor |
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Term
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Definition
| the entities that make up the investment family of a VC |
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Term
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Definition
| a person who invests in startup companies |
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Term
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Definition
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Term
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Definition
| a right to purchase shares of stock in a company |
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Term
| weighted average antidilution |
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Definition
| a style of antidilution that reprices an investors investment, usually through an conversion price adjustment, to a lower price per share, but takes into account the relative effect of the amount of shares sold in the current round |
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Term
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Definition
| when a company is nearly insolvent and doesn't have the assets to pay of its liabilities |
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