Learning the Lingo of Venture Capitalists
Going to a meeting with a Venture Capitalist can be unnerving, especially when you don't speak the lingo. Study our quick guide and next time a VC asks you what your runway looks like you'll know not to start talking about an airport.
Seed money: equity capital used to prove your concept and develop your product
Runway: the number of months a business can be funded by current assets and operating revenues
Pre-money: the valuation placed on your company before raising venture capital
Elevator speech: a business-plan promo that takes as long as a ride in a VC's elevator
Bridge funding: cash that carries your company between investment rounds
Burn rate: the amount of money a business loses monthly that must be funded by capital rather than operating profits. This gives investors a feeling for how you manage cash flow.
Due diligence: Process undertaken by venture capitalists, investment bankers or others to thoroughly investigate a company before financing it; required by law before securities are offered for sale.
ROE: return on equity
Short arms refers to a VC who enters a first round of funding but is leery about staying in for a second.