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What three factors are the most important in value creation?
deal selection, deal sourcing, and post-investment value-added
Explain 'IPO'.
initial public offering: the first sale of a company's shares to the public
Explain 'deal flow'
Deal flow = How many business proposals / start-up pitches / investment opportunities come to the VC
Why is strong deal flow considered an advantage?
It increases the chance of discovering high-quality start-ups and selecting better investment opportunities.
Explain the term 'portfolio company'
A portfolio company is a company (public or private) that a venture capital firm, buyout firm, or holding company owns equity.
What is the purpose of a term sheet?
It 'summarizes the VC’s conditions for a financing'
Explain 'the least negotiable provisions' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
the contract terms venture capitalists are least willing to change or compromise on
Explain 'pro rata rights' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
the right, but not the obligation, that can be given to an investor to maintain their initial level of percentage ownership in a company during subsequent round
Explain 'anti-dilution protection' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
a mechanism to protect an investor’s equity stake from being diluted during subsequent fundraising rounds where new shares are issued at a lower price per share
Explain 'valuation' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
the act of deciding how much money something is worth, or the amount decided
Explain 'board control' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
refers to how many seats on the company’s board of directors the investor receives
Explain 'vesting' in "the least negotiable provisions for VC firms in descending order are prorata rights, liquidation preference, anti-dilution protection, valuation, board control, and vesting."
a process giving employees the right to keep the shares, pension plans, etc. given to them by a company after working there for an agreed period
