We explain the most important topics in the startup vocabulary.
So it’s your first time at a meetup and someone is using jargon you have never heard of before such as „due diligence“, „internal rate of return“, „mezzanine financing“.
A selection of these topics is explained below:
Business Angels not only contribute knowledge, contacts etc. to the startup, but also contribute financially. Unlike venture Capitalists, business angels aren’t primarily interested in profit.
In order to keep the risk of an investment as low as possible, an agreement is made that the investor will have the opportunity to do a detailed review and assessment of the company
#Early Stage Financing
This is about the financing during the early phase. Usually there are neither notable customers, nor any sophisticated products to speak of.
Simply put: the sale of the startup. Exit opportunities include: sale to another company (trade sale), repurchase by the founder (buy-back), market (going public).
Investors spread their investments over several phases. The funds are then incrementally released once each milestone has been reached.
(Partial) sale of the company shares on the stock exchange.
Also simple: STARTPLATZ. Or: initiatives that allow startups to develop business ideas further and provide the support, consulting and infrastructure required.
#IPR Intellectual Property
This includes things such as patent protection, design protection and Copyrights, which protect intellectual property.
Is a federal innovation promotional agency, which makes the successful launch and the first steps of expansion possible by way of extensive coaching. Successful young entrepreneurs receive the KTI-Label and are connected with with potential financiers.
#Letter of Intent
The Letter of Intent sets out the main points of a future contract, for example, for the sale of shares.
#Make or Buy
„Make or buy“ is a decision model in business administration, which is applicable to many areas. One must ask the question: should services be provided in-house or outsourced.
#Non Disclosure Agreement
If a particular department of a startup is removed, it is considered spun-off. However, such departments are only legally independent, economically. Universities designate, for example, startups arising from their research laboratories as spin-offs.
Professional investors or even an investment company which can make high demands on the development of startups due to their considerable financial consideration in a company. VCs mainly serve to increase the value of the company.