Venture Capital Startup Dictionary

I graduated from college with a degree in engineering. I knew almost nothing about money or economics or finance. Then I went to business school. (Okay, I worked for several years between the two.) About halfway through my first year, I realized that I had spent my whole life without knowing anything about what made the world go round '. No, not love (no love for b-school). Money!

Most importantly, I learned that you can program Excel spreadsheet six ways to Sunday, but if you can not speak the language of money, nobody takes it seriously. So I began a quest to learn how to talk about money, including watching movies like Wall Street, reading books like Barbarians at the Gate (also a film) and Liar's Poker.

Of course, many years later, I forgot what I did not know, and I forget that entrepreneurs often have great ideas but lack the language of finance to move through the world of investments. So here are some basic definitions when you are looking for money.

Investor - someone who exchanges money for a share of your company.

Angel - an individual who invests a decent chunk of money in your company ($ 100-500K) in exchange for some property. They tend to be entrepreneurs who have made it big and are often less demanding and more venture capitalists to interfere. (This is not always true, by the way).

Venture Capitalists - a person who is a partner in a venture capital (VC), which helps companies find, select and manage investments made by VC firm. In general, VCs get their money from limited partners (who can be anyone from wealthy investors to companies to pension funds). Limited partners have no say in the investments.

Associate - a young person at the VC firm that has no power, but they act like they do with arrogance. If you spend a lot of time with a partner, you're probably losing.

Principal - a partner whose been promoted. The power of this person depends on the company. Still not a decision maker, but you can blackball.

One Pager - a page (usually the front and rear), which describes your company. Includes some 'history, mini financial management description, product description, and business strategy. Your business plan in miniature.

Summary - such as the pager, but a bit 'longer. Your abbreviated business plan.

Your Business Plan - a 20-30 page document that can only be read by the shareholder. It should still be good or if they know not to take seriously.

Pitch Deck - otherwise known as a presentation (see I told you the jargon was different). Usually a Powerpoint presentation that you use when you present to the VC. If you are really interested, you probably will not get beyond the first two slides. Please count those slides!
I graduated from college with a degree in engineering. I knew almost nothing about money or economics or finance. Then I went to business school. (Okay, I worked for several years between the two.) About halfway through my first year, I realized that I had spent my whole life without knowing anything about what made the world go round '. No, not love (no love for b-school). Money!

Most importantly, I learned that you can program Excel spreadsheet six ways to Sunday, but if you can not speak the language of money, nobody takes it seriously. So I began a quest to learn how to talk about money, including watching movies like Wall Street, reading books like Barbarians at the Gate (also a film) and Liar's Poker.

Of course, many years later, I forgot what I did not know, and I forget that entrepreneurs often have great ideas but lack the language of finance to move through the world of investments. So here are some basic definitions when you are looking for money.

Investor - someone who exchanges money for a share of your company.

Angel - an individual who invests a decent chunk of money in your company ($ 100-500K) in exchange for some property. They tend to be entrepreneurs who have made it big and are often less demanding and more venture capitalists to interfere. (This is not always true, by the way).

Venture Capitalists - a person who is a partner in a venture capital (VC), which helps companies find, select and manage investments made by VC firm. In general, VCs get their money from limited partners (who can be anyone from wealthy investors to companies to pension funds). Limited partners have no say in the investments.

Associate - a young person at the VC firm that has no power, but they act like they do with arrogance. If you spend a lot of time with a partner, you're probably losing.

Principal - a partner whose been promoted. The power of this person depends on the company. Still not a decision maker, but you can blackball.

One Pager - a page (usually the front and rear), which describes your company. Includes some 'history, mini financial management description, product description, and business strategy. Your business plan in miniature.

Summary - such as the pager, but a bit 'longer. Your abbreviated business plan.

Your Business Plan - a 20-30 page document that can only be read by the shareholder. It should still be good or if they know not to take seriously.

Pitch Deck - otherwise known as a presentation (see I told you the jargon was different). Usually a Powerpoint presentation that you use when you present to the VC. If you are really interested, you probably will not get beyond the first two slides. Please count those slides!

Term Sheet - a non-binding offer of terms by which the VC is willing to invest (see Elements of a Term Sheet).

Pre-Money Valuation - what the VC thinks your company is the first of their investment. This will be different from what you think it's worth (see evaluation (for an investment of Venture Capital)).

Post-Money Valuation - what your company was worth before the investment (Pre-Money) plus the investment. Your pre-money was $ 5 million, the investment is $ 5 million. Your post-money valuation is $ 10 million and owns half the VC.

Well, this is a decent list to start. If I think of other terms of venture capital in need of definition that are not otherwise defined on the site, I'll add them.

Good luck.
Term Sheet - a non-binding offer of terms by which the VC is willing to invest (see Elements of a Term Sheet).

Pre-Money Valuation - what the VC thinks your company is the first of their investment. This will be different from what you think it's worth (see evaluation (for an investment of Venture Capital)).

Post-Money Valuation - what your company was worth before the investment (Pre-Money) plus the investment. Your pre-money was $ 5 million, the investment is $ 5 million. Your post-money valuation is $ 10 million and owns half the VC.

Well, this is a decent list to start.

Good luck....