Accelerator | a programme that takes in relatively early-stage start-ups, helps them develop their product.
Angel investors | individuals with disposable income who like to invest part of their portfolio in start-ups.
Business plan | a detailed outline of your business, including the problem it is solving, the strategy for growth, revenue projections, marketing strategy, team profiles, and more.
B2B – Business to business | business that aims to sell products and services to other businesses.
B2C – Business to consumer | business that aims to sell products and services to consumers.
CAPEX – Capital expenditure | the funding needed to invest in assets that your business needs to get off the ground, or improving these assets.
Capitalization table | this is a simple breakdown of who owns how many shares in the business, and the ownership percentage that corresponds to.
Collateral | an asset used as a security when taking out a loan.
Convertible note/debt | short-term debt that may or may not convert to equity in a future financing round.
Crowdfunding | raising (typically) small amounts from a large group of people.
Debt financing | debt financing means accepting capital with the promise of repaying the principal and interest.
Due diligence | the ‘homework’ that investors conduct on a business before they invest; this can include reference checks, a deeper dive into your business model, and studying the market you are in.
Equity | ownership stake in a company.
Exit | a way for existing company shareholders to realize their returns; typically, this is done via an acquisition, an initial public offering on the stock exchange, or secondary sale of shares.
Grant | type of funding that typically does not obligate the recipient to repay the funds; usually, the money can only be used in the way agreed to prior to disbursement.
Incubator | an incubator takes in very early-stage companies and helps them to narrow down their business idea and connects them to network of partners and funders.
IPO | stands for ‘initial public offering’ and it basically means that a company starts floating on a stock market, selling a significant number of their shares in the process to institutional and non-institutional investors.
IRR – Internal rate of return | a measure, expressed as a percentage, used to evaluate the profitability of an investment.
Mezzanine | type of financing that has both equity and debt features.
OPEX - Operating expenditure | ongoing expenditures that are needed to run your businesses (e.g., salary, subscriptions to cloud services, office rent).
Pitch deck | a slide presentation that gives a breakdown of your solution, the market opportunity, your team, and your financials.
Principal | the original loan amount, without interest.
Profit | this is the company’s bottom line, which is revenue minus expenses, taxes, depreciation, and operating costs.
Revenue | this is the company’s top line, which means it is the money generated from all activities of the company in a given time period.
Secondary sale of shares | a way for existing investors to realize their returns; this is different from a primary sale, in which a start-up issues new shares to an investor.
SME – Small and medium-sized enterprise | company classification that is defined differently by different countries, depending on number of employees or annual revenue.
Tenor | the amount of time until a loan is due to be repaid.
Term sheet | the document investors present to a company they are interested in funding; this will include details of what form of investment the investor wants to make and the terms of such an investment.
Unit economics | the costs and revenue made per product or service sold; this is important for businesses to understand and project how per unit costs and revenues will change as the business grows.
Valuation | the value of your company before (pre-money) or after (post-money) a funder invests in your business.