Venture financing terms

Investment lexicon for entrepreneurs, angel investors and venture capitalists

What’s “burn rate”? What’s the difference between a “venture capitalist” and a “vulture capitalist”? What do “ROI” and “NDA” stand for? The arcane lexicon of venture financing can leave some entrepreneurs scratching their heads – which is not a great thing to be doing in front of a roomful of potential investors.

• The YCE Investment Lexicon is FREE to download!

Entrepreneurs are usually experts in their field. Plenty of CEOs of technology firms started out as programmers or engineers. Successful chain restaurant CEOs started out as chefs in their family’s kitchen. They know their business well – but they often don’t have the formal training in investment terminology.

Let’s go over a few of the common terms:

• Burn rate. The amount of money the company consistently spends each month on salaries, rent, general expenditures and administration.

• Hockey Stick Forecast. A five-year forecast with year-over-year revenue growth. In chart form, it looks like a hockey stick.

• Valuation. The monetary value placed on a company and agreed to between the investor and entrepreneur. It forms the basis of the investment. 

• NDA (Non-Disclosure Agreement). A legal document to protect the company’s confidential information.

Learn more the Your Capital Edge’s Investment Lexicon which is FREE to download. Get familiar with the language of investing

Listen to how venture capitalists and CEOs use this kind of language themselves in a discussion about How Venture Capital Works