Startup Fundraising Glossary

Navigate the world of startup financing with confidence

Explore a glossary of essential terms in startups, startup fundraising, bootstrapping and entrepreneurship. Decode the terminology and jargon with ease.

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Entrepreneurial EcosystemEntrepreneurial Ecosystem refers to the social and economic environment affecting the local or regional entrepreneurship.Entrepreneurial MindsetEntrepreneurial Mindset refers to a specific state of mind which orientates human conduct towards entrepreneurial activities and outcomes.Entrepreneurial SpiritEntrepreneurial Spirit is the mindset that embraces critical questioning, innovation, service, and continuous improvement, driving founders to overcome challenges and succeed.EntrepreneurshipEntrepreneurship is the activity of setting up a business or businesses, taking on financial risks in the hope of profit.EquityEquity represents ownership interest in a company, whether in the form of private equity or public equity.Equity BuybackEquity Buyback is when a company repurchases its own shares from the marketplace, reducing the number of outstanding shares and often aiming to increase shareholder value.Equity CompensationEquity Compensation is a non-cash payment that represents ownership in the company, used to attract, retain, and motivate employees.Equity CrowdfundingEquity Crowdfunding allows businesses to raise capital from a large number of investors who each contribute a small amount of money in exchange for equity.Equity DilutionEquity Dilution occurs when a company issues more shares, reducing the ownership percentage of existing shareholders.Equity ReleaseEquity Release is the process by which a startup or business owner can extract value from their company without selling it, often through debt instruments convertible into equity.Equity ResearchEquity Research involves analyzing companies, industries, and associated stocks to make investment recommendations.Equity Research AnalystEquity Research Analyst provides research coverage of public companies and distributes that research to clients, aiding in investment decisions by analyzing financial data and trends.Equity SharingEquity Sharing involves distributing company shares among founders, employees, and investors to align interests and incentivize performance.Equity StakeEquity Stake represents the percentage of ownership an investor has in a company.Equity Vesting ScheduleEquity Vesting Schedule outlines the timeline and conditions under which equity awarded to employees or founders becomes fully owned and exercisable.Equity-Based CompensationEquity-based compensation is a form of payment that provides employees with shares or options to acquire shares of the company they work for.Equity-Based CrowdfundingEquity-Based Crowdfunding involves individuals investing in a startup in exchange for equity shares, allowing companies to raise capital directly from small investors.Escalator PitchAn escalator pitch is a succinct and persuasive sales pitch designed to capture the interest of potential investors or partners in a very short time frame.EscrowEscrow is a legal concept describing a financial instrument whereby an asset or escrow money is held by a third party on behalf of two other parties in the process of completing a transaction.Ethical FundraisingEthical Fundraising adheres to principles of honesty, transparency, and respect in raising funds, ensuring practices are fair and beneficial to all parties involved.Ethical HackingEthical Hacking involves legally breaking into computers and devices to test an organization’s defenses, crucial for startups in cybersecurity to demonstrate their systems’ robustness.Ethical InvestingEthical Investing is the practice of investing in companies that contribute to or align with the investor`s personal values, such as environmental sustainability, social responsibility, or governance.Evergreen ContentEvergreen Content is content that is always relevant to readers, regardless of the current news cycle or season, contributing to long-term traffic growth.Exclusivity AgreementExclusivity Agreement is a contract between two or more parties where one party agrees to buy exclusively from the other.Exclusivity PeriodExclusivity Period is a term within a contract that grants one party exclusive rights to a business opportunity for a specified time, often used in negotiations.Execution RiskExecution Risk is the risk that a company`s management will fail to implement a business plan or strategy effectively.Executive CoachingExecutive Coaching is a personalized process that builds a leader’s capability to achieve short- and long-term organizational goals, crucial for startup founders and C-level executives.Executive SummaryExecutive Summary is a short document or section of a document produced for business purposes, summarizing a longer report or proposal in a way that readers can rapidly become acquainted with the material without having to read it all.Exit FeeExit Fee is a charge that may be incurred by an investor for withdrawing funds from an investment before a specified period.Exit StrategyExit Strategy is a planned approach to exiting a business venture, typically aimed at realizing a return on investment.Exit ValuationExit Valuation is the valuation at which a company is sold or exits, providing a return to investors and shareholders.Expansion CapitalExpansion Capital is funding provided for the growth and expansion of a company, which may include entering new markets, increasing production capacity, or developing new products.Expansion StageExpansion Stage refers to a phase in a startup`s growth focused on scaling the business, typically after proving product-market fit.Expedited Due DiligenceExpedited Due Diligence is a swift, thorough examination and appraisal of a business or its assets before signing a contract, often used in time-sensitive business transactions.Expense ForecastingExpense Forecasting is the process of estimating the costs a startup will incur over a specific period, crucial for budgeting and financial planning.Exponential GrowthExponential Growth describes growth that occurs at a rapidly increasing rate, often used in the context of startups experiencing rapid increases in revenue or customer base.External CapitalExternal Capital refers to funds raised from outside investors, including venture capital, angel investors, or crowdfunding, as opposed to internal financing through revenue or founder contributions.External FinancingExternal financing is the process of raising capital from outside sources, such as loans, equity investments, or bonds, to fund business operations and growth.External FundingExternal Funding refers to capital raised from sources outside of the company, including venture capital, angel investors, or crowdfunding.External GrowthExternal Growth is expansion achieved by a startup or company through acquiring or merging with other companies rather than organic growth.External ValidationExternal Validation is confirmation from third-party sources that a startup’s business model, product, or service is viable and has market potential.Family and Friends RoundFamily and Friends Round is an early stage of financing where entrepreneurs raise capital from personal connections, often to fund initial development before seeking external investors.Feasibility StudyFeasibility Study is an analysis and evaluation of a proposed project to determine if it is technically feasible, financially viable, and legally permissible.Feedback LoopFeedback Loop is a system used to gather and integrate feedback from users or customers to improve products, services, or operational strategies, critical for iterative development in startups.Finance RoundFinance Round is a phase in which a startup secures capital from financial backers to support its operations, expansion, or product development, typically categorized by stages such as Seed or Series A.Financial Due DiligenceFinancial Due Diligence is an in-depth examination of a company`s financial records by potential investors or buyers to assess its valuation and the veracity of its financial information.Financial ForecastingFinancial Forecasting involves the process of estimating or predicting a startup`s future financial performance, based on historical data, market analysis, and growth projectionsFinancial HealthFinancial Health is a measure of a company’s financial stability, typically assessed through various indicators such as liquidity, solvency, profitability, and operational efficiency.Financial IndependenceFinancial Independence is the status of having enough income to pay for one`s living expenses without being employed or dependent on others.Financial LeverageFinancial Leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain will exceed the cost of borrowing.