Venture Capital essentials - What to know? Jargon, big picture

The VC world also known as Venture Capital is a strange but a wonderful world to visit and live in.There are many gatekeepers who will not entertain you or give you a head's up.The reason, secret agenda  > "Dogs & Assholes not allowed". Many of my connections may say otherwise however in the core this exists.

How to survive here, The key is - willing to listen to the person sitting next to you or opposite to you and UNDERSTAND the facts from the made up numbers. Do not offend people as it is a connected world after all.Be nice & gentle in behaviour but smart in making deals.

There is a set of words and Jargon that is most common & you need to get a hang of it.Let's go through few of them and try to make sense of each, in common language.I do not believe in Confusing people, without any reason. So lets have a look below.

Few word's that may be helpful in your VC meeting's.


Accelerator (aka Incubator) - This is a setup that provides mentorship, connections, reviews MVP and sometimes gives capital to support startups.Ok what they get in return, in most cases they will take 10 to 20% of the equity in the startup.In most case's educational institutes form Incubator.

Boot-Strapping - Hustle, make it happen with what you can get and what you have.Get money from Friends, Family and other people you can get it.Use whatever you can lay hand's off & for God sake make it work.This is boot-strapping in my views.Let's look at few examples.If the MVP is taking more time to get finished, use some Open Source code to at least give demo to people whom you want to explain the concept.Call your cousin and beg him to write few modules in his/her spare time.In a nutshell Just make it happen.

B-to-B = Business to Business. Your company sells things to other companies

B-to-C = Business to Consumers. Your company sells things to masses.

P-to-P = People to People. You own a platform that allows people to sell among themselves.

Burn Rate (aka Run Rate) - How your company is using cash each month.A startup use's lots of cash before it reaches break-even.In most cases the burn rate is measured in $/month.



Cottage Business/ Cottage Industry - The industries/business that are not largely scalable.If you want to really make cash loads avoid these.

Deck or Simply call it Pitch Deck - The most promising will be a 10 deck slide.A science & art indeed.Consider an expert to review your pitch deck before you embarrass yourself and the investors.

Exit strategy - How you will return the money back to investors with a good return.Sell the company and who is likely to buy.

Runway - How long you can run the show without the cash running out.

Sweat Equity - Hiring someone and giving him/her only equity in the company.One of the options to hire talent if you do not have cash to pay as salary.

Term Sheet - The document that covers the % equity to be given to investors in return of capital.What are the voting rights and other sections that will close the investment.



Traction - Are people buying or using your product.A must to have when we need investment from investors, why because these guys care for Traction. Nothing convinces them than the traction.Of course i also prefer companies with good traction.

Valuation - The process by which a company's worth or value is determined. An analyst will look at capital structure, management team, and revenue or potential revenue, among other things.



Vesting - When an employee of a company gains rights to stock options and contributions provided by the employer. The rights typically gain value (vest) over time until they reach their full value after a pre-determined amount of time. For example, if an employee was offered 200 stock unites over 10 years, 20 units would vest each year. This gives employees an incentive to perform well and stay with the company for a longer period of time. Series - Refers to the specific round of financing a company is raising. For example, company X is raising their Series A round.

Connect if you are investor and want in invest in Silicon Valley cities.

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