Learn your ABCs of the private market and startup ecosystem.
An angel investor is a high net worth individual who provides financial backing for small startups or entrepreneurs in exchange for equity in their business.
For example: Anupam Mittal invested approximately Rs 1 crore in Ola Cabs in April 2011.
Acquihire refers to purchase of a company mainly to recruit its key employees and team members. An acquihire is different from a merger and acquisition.
For example: Leading edtech company BYJU’S acqui-hired reading platform Epic! For $500 million in July 2021.
Alternative Investment Fund (AIF) is a privately pooled investment corpus where private investors can contribute to collectively invest in businesses according to a mutually agreed plan.
An example of this is the LetsVenture Angel Investment Fund, which is a SEBI-registered Category 1 Fund, incorporated in October 2018.
The monthly rate at which a new company spends its initial capital to finance overheads before generating positive cash flow. A company can reduce burn rate by generating revenue from business and reducing costs.
For example, a company with the monthly burn rate of Rs 20 lakh would mean it is spending Rs 20 lakh every month.
Bridge financing is a temporary financing option to cover a company's short term costs till a long- term financing is secured. Hence, a bridge financing "bridges" the gap. They can be in the form of debt or equity.
For example, a SaaS company facing a cash crunch may seek $10 million in funding till a new product is developed and launched.
Customer Acquisition Cost is a cost incurred to acquire new customers. This includes the cost of producing, storing and shipping the products.
For example, a Direct-to-Consumer (D2C) brand may spend Rs 500,000 on a marketing campaign to acquire 5,000 new customers.
The Cap Table or the capitalization table is an analysis of a company's percentages of ownership by founders, investors and other owners. A breakdown of a company’s shareholder equity, it is most commonly used by startups and early stage businesses.
A predetermined period of time when stocks gradually vest. A 1-year cliff at startups that award ESOPS/stocks to employees means that if an employee leaves within a year then they don't get any stocks/ESOPS in that startup.
Deal flow refers to the rate at which investment opportunities come to a particular investor or investment firm.
Discounted Cash Flow is a startup valuation method that estimates the value of a company based on its expected cash flow in the future.