Foto de Karl Solano na Unsplash

Essential Investment Glossary for Startups: Speak the Language of Investors

In the startup ecosystem, understanding the language of investment is essential to turning ideas into viable businesses. From angel investors to venture capital, and from convertible notes to valuations, each term reflects a part of the fundraising process.

This glossary brings together the key concepts every entrepreneur should know to communicate effectively with investors and maximize their startup’s growth opportunities.

Blockchain
Blockchain is a transparent and decentralized database where all records are stored and can be accessed by anyone. It records token transactions, whether these tokens are cryptocurrencies or represent a particular voting system.

Business Angels
Individual investors who invest directly or through special purpose vehicles, offering not only capital but also networks, knowledge, and experience in high-potential growth companies.

Bootstrapping
Funding a business using personal resources or revenues generated by the company itself, without external investors.

Burn Rate
The rate at which a company consumes available capital to finance its operations before reaching profitability.

Venture Capital
Funds that support small and medium-sized enterprises that are already established and have growth potential. Typically lasting five to seven years, invested resources finance early expansions, taking the business to new market levels.

Cap Table (Capitalization Table)
Document showing a company’s ownership structure, including share percentages and types of shares.

Cash Flow
The amount of money received and paid by a business over a specific period.

Convertible Note
A debt instrument that can be converted into equity in a future investment round.

Design Thinking
An innovation methodology that involves a deep understanding of people’s and/or communities’ needs through direct observation, leading to the development of feasible and viable business solutions.

Due Diligence
A detailed analysis conducted by investors to assess a company’s financial, legal, and operational risks.

Equity
Ownership in a company, representing a share of capital and entitlement to financial returns.

Exit
The moment when investors sell their stake, usually through a company sale or an IPO.

IPO (Initial Public Offering)
The first public offering of a company’s shares on a stock exchange.

Business Model
The way a company creates value, delivers it to customers, and generates revenue in the process.

Market Niche
A small market segment consisting of a group of consumers with a homogeneous and clearly identifiable profile.

Pitch
A brief presentation, usually three to five minutes, of a business idea’s value proposition aimed at attracting potential investors or partners.

Pitch Deck
A structured presentation used to demonstrate a business model and attract investment.

Pre-money Valuation
The value assigned to a company before new investment.

Post-money Valuation
The value of a company after investment, including the invested capital.

Startup
A business project originating from an original idea or research, in the phase of creating a repeatable and scalable business model. It operates in an uncertain environment and usually requires funding to launch marketing and commercial activities.

Seed Capital
Initial investment aimed at product development and validation of the business model.

Seed Stage
The phase before the formal launch of a company, where an initial product or service concept is conceived and developed.

Term Sheet
A preliminary document defining the main investment terms before the definitive contract.

Venture Capital
Professional investment in companies with high growth potential, usually in expansion phases.

Unicorn
Startups valued at over $1 billion (approximately €900 million).

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