Align your funding pathway with your growth stage.

Individuals with a degree of personal wealth, who invest in early-stage companies. They usually come along at an earlier stage of the business, and since their risk is greater than other investors, they typically invest smaller dollar amounts. They are generally accredited investors, as determined by the SEC.

A statement of a company’s financial situation at a single point in time.  

(One of the most common expressions in the startup world.) Bootstrapping is a term used in business to refer to the process of using only existing resources, such as personal savings, personal computing equipment, and garage space, to start and grow a company. This approach is in contrast to bringing on investors to provide capital, or taking on debt to fund a business’ expansion.

A short-term loan from investors to hold you over until the next round of funding or more capital can be secured. 

How fast you go through cash. The majority of startups lose money before they break even and then eventually make a profit. 

A convertible note - or convertible debt - is a kind of loan that can be issued towards a round of future funding. A convertible note has an interest rate and maturity date, like a loan. Both a SAFE (similar, but different) and Convertible Note are designed to convert to equity when the company raises more money (how much is negotiated).

This investment is coming from within a corporation, and it could also include industry insights and connections. Beyond equity, the CVCs may be looking for a collaboration agreement or they may see your company as an acquisition target.

Asking the public for funding (there are various websites that help with this). You may or may not offer equity in exchange. Disadvantages could include theft of your idea, loss of reputation if things go awry with your company, or the inability to crowdfund again in subsequent stages of investment. 

How you plan to sell your company to give you and your investors a return on their investment. This ranges depending on the industry but a standard multiple with technology investments seems to be 10x. 

A repeat investment from a funder who previously provided capital, now at a later stage in the business.

This is mostly what it sounds like, it’s fairly common and tends to happen early on in a business venture. The “3 F’s” represent the earliest capital a new company may receive from those closest to them. The addition of “fools” refers to the high level of risk associated with this type of transaction.

An expression used by investors to describe the shape of the growth curve they want to see in businesses they invest in. They want to see their startups grow quickly and at least double sales every year.

Understanding the market size is essential for securing funding because it demonstrates the potential for growth and profitability of a business. Investors are keen to know the total addressable market (TAM) to gauge the maximum revenue opportunity available if the business achieves full market penetration. A well-defined market size can also help in strategic planning, indicating how much of the market share the business can realistically capture. This information is crucial for investors as it helps them assess the risk versus the potential return on their investment.
Learn more:  https://foundationinc.co/lab/tam-sam-som

How you make money?

A minimum viable product is the simplest form of your product. This can be used to attract Beta users/early adopters or to pitch for funding. 

The value of a company before external investments or the latest round of funding/ the value of company after external investments or the latest round of funding.

This is an investment where the valuation of the company is determined as a negotiation between the company and the investor, and includes a price-per-share so it's clear how much of the company everyone owns.

An expression frequently used by Paul Graham of Y Combinator, it means you are making just enough money to be able to pay for basic living expenses. 

When an investor puts money into a company, he wants to know what he will get out. This is called the return on investment. The investor(s) will also want to know how long it will take to get their ROI? 

Describes how long your cash will last and when you think it will run out. 

A non-debt convertible security. It will eventually convert into equity in a future investment round.

The first official round of startup funding or equity funding (selling shares or ownership). 

Series A Funding: The second stage of startup funding, but the first stage of venture capital financing.

When you give shares of your company to early employees or contractors in place of cash. This is very common in the startup world before funding arrives. If you take a chance with a scalable startup, your shares might become lucrative when the company sells.

When an investor makes you an offer to invest in your company, the term sheet is a document that outlines what they will get for what they put in — including % ownership and voting rights. 

Describes what your company is being valued at. “Pre-money valuation” is the value before you take investors’ cash. “Post-money valuation” is that amount plus the investment put in.  

Private investors or investment firms that use money from pension plans, insurance companies, and wealthy people to place bets (capital) in exchange for equity in companies they believe have lots of growth potential, usually of (planned) unicorn proportions.