Common terms Every Founder trying to fundraise should know
1. MVP (Minimum Viable Product) - The simplest version of a product built with just enough features to test demand and gather user feedback.
2. Data Room - A secure folder containing company documents investors review before investing.
3. Pre-Seed Round - The earliest fundraising stage used to validate an idea and build an initial product.
4. Seed Round - Early-stage funding used to grow the team, product, and customer base after initial validation.
5. Angel Investor - A wealthy individual who invests personal money into startups, usually at an early stage.
6. Venture Capital (VC) - Professional investment firms that invest in high-growth startups in exchange for equity.
7. Due Diligence - The process where investors verify a startup’s financials, legal status, team, and business model before investing.
8. Term Sheet - A non-binding document outlining the key terms and conditions of a proposed investment.
9. Cap Table (Capitalization Table) - A record showing who owns what percentage of a company, including founders, employees, and investors.
10. Burn Rate - The amount of money a startup spends each month.
11. Runway - The number of months a company can operate before running out of cash.
12. TAM (Total Addressable Market) - The total revenue opportunity if you captured 100% of the market.
13. SAM (Serviceable Available Market) - The portion of the TAM your product can realistically serve.
14. SOM (Serviceable Obtainable Market) - The market share you can realistically capture in the near term.
15. Valuation - The estimated worth of a company at a specific point in time.
16. Pre-Money Valuation - The company’s valuation immediately before new investment capital is added.
17. Post-Money Valuation - The company’s valuation immediately after an investment is made.
18. Dilution - The reduction in an existing shareholder’s ownership percentage after new shares are issued.
19. MRR (Monthly Recurring Revenue) - Predictable revenue generated every month from subscriptions or recurring customers.
20. ARR (Annual Recurring Revenue) - The yearly equivalent of recurring revenue, typically ARR = MRR × 12.
21. Traction - Evidence that customers want your product, usually shown through growth in users, revenue, or transactions.
22. LTV (Lifetime Value) - The total revenue or profit expected from a customer throughout their relationship with the company.
23. Acquisition - When one company purchases another company.
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That's the realest demonstration of karma you'll ever see.
Most rich men know this and almost never verbally mock a fellow man's lack of buoyancy.
If you are a Founder trying to raise money
Here are some essential documents you need to have when fund raising.
1. Founder agreement
2. Incorporation Documents
3. Co-founder exit clause
4. Shareholders agreement
5. Cap table
6. ESOP agreement
7. NDA
8. IP assignment agreement
9. Trademark/IP documents
10. HR policies
11. Terms of service
12. Privacy policy
13. Legal compliance docs
14. Pitch deck
15. Financial model
16. Term sheet (if funded)
Add any you think are missing in the comments.
There is money in this world. Insane money. Your mates are making ridiculous money out there because of information, access, and network. Pressure yourself, you are not doing enough.