20 tech-savvy terms from the world of VCs and private equity that founder must know.
1. * Accredited Investor:* Picture them as the big shots in investing, the folks who can handle the wild ride of private companies.
2. * Bridge Round:* It’s like the snack you have between meals, except this one helps startups go from hungry to unicorn status.
3. * Clawback:* The safety net for investors is like a guarantee that you’ll get your money back if the company’s plans go worse than a cooking disaster on a reality TV show.
4. * Closing:* The grand finale of the investment deal, where pens meet paper and wallets meet companies.
5. * Conversion Rights:* Turning investments into shares, a bit like turning your old stuff into cold, hard cash.
6. * Dilution:* When your share of the startup’s ownership starts to look as small as a thin slice of pizza.
7. * Drag-along Rights:* Ever had a friend drag you to a party ? Well, this is the corporate version of that!
8. * Earn-In:* Investors earn their ownership rights by achieving business milestones, similar to unlocking achievements in a game like Duolingo.
9. * Exit Event:* It’s like winning a special ticket; your journey ends with a successful finish.
10. * Fiduciary Duty:* The legal superhero cape that forces investment managers to be the good guys.
11. * First Lien Debt:* In the world of creditors, these folks are first in line at the buffet.
12. * Fund of Funds:* Because sometimes even investors need a little diversification in their life.
13. * J-Curve:* The ups and downs of venture capital can be a wild ride, not for the easily scared. So, get ready for a bumpy journey!
14. * Key Man Insurance:* For when your company’s MVP is also its VIP (Very Important Person).
15. * Leveraged Buyout (LBO):* When private equity firms shop for companies with someone else’s credit card, and then cross their fingers for a big payday.
16. * Management Buyout (MBO):* When the employees take over the office, it’s like ‘The Office’ but with more stock options.
17. * Management Fee:* The fee for the folks steering the investment ship. They’re like the captains, and this is their paycheck.
18. * Mezzanine Debt:* It’s like that middle child of investments, always trying to prove itself among the seniors and juniors.
19. * Net Asset Value (NAV):* Every few months, we check in on a VC fund’s money diary. Did they spend a lot or save it?
20. * Preferred Stock:* Stocks with benefits! Get priority treatment in the company’s version of the red carpet.
21. * Pro Rata Rights:* Because in the investment world, FOMO is a real thing.
22. * Ratchet:* The financial equivalent of the ‘easy’ mode in Contra — investors get an extra life when things get tough!
Originally published at https://www.scoobynel.com.
