VW Podcast

Angel Investors are individuals who provide seed or startup finance to entrepreneurs. In addition to an investment, angel investors may also provide industry contacts and knowledge.

B2B is an abbreviation of “Business-to-Business.” B2B describes a sales strategy with businesses as the primary customer.

A transaction or series of transactions whereby a startup raises investment dollars (or “capital”) to grow the company. Capital raises can be debt, convertible debt, or equity.

An Elevator Pitch is a brief description of a startup. It should be brief enough to be delivered during an elevator ride.

General Solicitation is a company or fund publicly advertising its securities. General solicitations offer the potential to reach more investors. However, general solicitation may cause the company to have to comply with more stringent security registration requirements at the state and federal levels.

A Private Offering is a company selling its securities to private-accredited investors without registering the securities with the SEC.

Regulation D Rule 506 is a “safe harbor” for the private offering exemption. Under this rule, companies can raise an unlimited amount of capital to an unlimited number of accredited investors and up to 35 other purchasers. Also, subject to certain restrictions, the company may use general solicitation or advertising to market the securities. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated –  that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment. Further, purchasers receive restricted securities, which may not be freely traded in the secondary market after the offering. Lastly, the seller must be available to answer questions by prospective purchasers. Please consult with an attorney.

A SaaS business is one whereby software is licensed to end users from a central location, usually delivered via the web. “SaaS” stands for “software as a service” and customers are generally billed monthly. Microsoft Office 365, Dropbox, Google G Suite, and Slack are all examples of SaaS businesses. Contrast those with the old days of buying software that came in a box and was installed through a peripheral drive.

Seed Capital is very early-stage financing for a startup with a business venture or idea that has not yet been established. Capital is usually provided by angels and/or friends and family, though a small number of venture capitalists do provide seed capital.

A Series A Round is generally the first significant capital funding event taken on by a startup, usually after that startup has raised some initial capital through a Friends and Family round, Seed round, or both. In a Series A round, the stock issued will typically be preferred stock designated as Series A stock. You may also hear this financing event referred to simply as an “A Round.”

The Total Addressable Market measures the total amount of people or money spent in the market that encompasses a product.

A Unicorn is a startup company valued at over $1 billion. Canadian tech unicorns are known as narwhals. A decacorn is a word used for those companies over $10 billion, while hectocorn is the appropriate term for such a company valued over $100 billion.

Valuation is the process of determining a company’s worth. Valuations can be determined as multiplies of the company’s metrics or comparisons to other companies that recently valued at certain amounts.

A Warm Introduction is an introduction made by an existing acquaintance to someone with whom you would like to become aquatinted, that is coupled with some sort of personal endorsement. In the venture capital world, a warm introduction is the gold standard.