Venture capitalists keep talking about things like seed-stage venture, leading a round of funding, LPs and exits. If you are planning to meet venture capitalists in the future, there are some basic words that you need to learn in order to keep up. Here basic words that will be helpful to know.
Bootstrap: This is a situation in which an entrepreneur starts a business with little capital. A person is said to be bootstrapping when he or she tries to found a company from personal savings or from the operating incomes of the new company.
Exit: This is a point at which an investor sells his or her stake in a company to realize his or her gains (or losses). Normally, exist occurs when a company either is bought by another company or goes public.
Fund: This a pool of money that investors use to finance companies in exchange for equity. The money comes from investment banks or wealthy investors.
Limited partners or LPs: institutions and groups who provide venture capitalist firms with money to invest. They include high-worth individuals, university endowments and pension funds.
Lead A round: The venture capital who “leads” a round of funding sets the financial and legal terms for the investment. A lead investor is the one contributing the largest amount of cash and help in finding other investors.
Seed: Seed capital is the initial funds used when starting a company, often coming from the founders’ personal assets, family or friends, for covering first operating expenses and attracting investors.
Series: These are stages of venture funding, usually occurring after a seed round. These series include Series A, Series B and Series C.