An entrepreneur looking for funding from investors has to understand a whole new terminlogy related to the investment terms. We thought it would be useful to give you basics of the most important ones, along with examples or further real-life implications. By the way, it is not uncommon that the other side (for example less experienced Angel Investors) are also not familiar with these terms, so this list  can be useful for both sides of the table.

Have any words or phrases to suggest? Let us know in the comments!

Accredited Investor (US+UK): A high-worth individual allowed by their government to make risky investments in private equity.

Angel: A high-worth individual who invests in startups. Generally speaking, Angels are less afraid to take greater risk, and usually invest with their own money.

Common Stock: The unit of ownership of the company typically owned by the founders. Common Stock is also the lowest level of financing. If the company goes into bankruptcy, money is only repaid back to common stockholders once the liquidation money is first paid to debt and preferred stockholders.

Convertible note: A form of financing where the company is lent money which acts like debt, unless… Continue reading →