Name | Column |
|---|---|
Bad Leaver | Without majority in the deciding body(shareholders│board). Founders can be revoked as managing directors against their will. |
Cap Table | spreadsheet showing the equity capitalization for a company |
Cliff | the amount of time before you are entitled to your equity (options), a typical structure is 4y vesting with a 1y cliff meaning that before 1y you can’t claim any equity, at 1y 25% and from then on it gradually increases over the remaining 3y, used to prevent founders leaving early |
Convertible | loan that converts into equity at the next round -- mostly with a discount on the next round and / or with a “cap”, i.e. maximum valuation for the conversion |
DCF | Discounted cash flow, basically what is the sum of your businesses future cash flows worth today |
Dilution | the degree to which your ownership (%) in the company decreases when new shares are issued in a fundraising event |
Drag along | The drag along right is the contractural right to force the others into an exit |
Good Leaver | has no voting right in the decision |
Post-Money | pre-money valuation plus investment = post-money valuation |
Pro rata | right of a VC to invest again in a future round to maintain his stake in the company |
SPV | Special purpose vehicle 🏎 - subsidary to decrease financial risk |
Tag Along | right to co-sell if another shareholder sells their shares |
Termsheet | a bullet-point document outlining the material terms and conditions of a potential business agreement |
Vesting | the 4 years mentioned in the “Cliff” section, over which you as a founder gradually get more equity |
VSOP | Virtual Stock Option Program |