Finance

Market size

The total potential revenue available in a particular market.

Team quality

The experience, skills, and cohesion of the founding team and management.

Product-market fit

The degree to which a product satisfies a strong market demand.

Traction

The progress and momentum a startup has made, often measured by metrics such as revenue growth and user adoption.

Competitive landscape

The analysis of the current and potential competitors in the market.

Valuation

The estimated worth of a company, often used to determine the investment terms.

Exit potential

The likelihood of a profitable exit through acquisition, IPO, or other means.

Risk profile

The assessment of the various risks associated with an investment, including market, product, and execution risks.

Investment thesis

The strategic rationale behind making an investment in a particular company or sector.

Financial health

The overall financial status of a company, including metrics like revenue, profitability, and cash flow.

Ownership stake

The percentage of the company that an investor owns.

Syndicate partners

Other investors who co-invest alongside the primary investor in a deal.

Governance and control

The influence and control an investor has over a company's decisions, often through board seats or voting rights.

Term sheets

The non-binding agreement outlining the terms and conditions of an investment.

Deal structure

The specific terms and conditions of an investment deal, including valuation, equity stake, and investor rights.

Follow-on investment

Additional investments made in a portfolio company in subsequent funding rounds.

Regulatory environment

The legal and regulatory framework that affects a company's operations and growth.

Innovation and technology

The uniqueness and defensibility of a company's technology or business model.

Customer base

The demographic and behavioral characteristics of a company's customers.

Scalability

The ability of a company to grow its business and increase revenue without a corresponding increase in operational costs.

Economic environment

The broader economic conditions that can impact a company's performance, including interest rates, inflation, and economic growth.

Capital under management

The total capital that a fund has raised from LPs to invest.

Management fee

The annual fee that GPs charge LPs for managing the fund, typically a percentage of the AUM.

Carried interest

The share of the profits that GPs earn from the fund’s investments, typically 20% of the profits.

Internal rate of return (IRR)

The annualized effective compounded return rate that can be earned on the invested capital, reflecting the profitability of investments.

Multiple on invested capital (MOIC)

A measure of the total return on an investment relative to the amount of capital invested.

Distributed to paid-in (DPI)

The ratio of cumulative distributions to LPs divided by the total capital called from LPs, indicating the cash returned to investors.

Residual value to paid-in (RVPI)

The ratio of the residual value of the fund (unrealized investments) to the total capital called from LPs, indicating the remaining value in the fund.

Total value to paid-in (TVPI)

The ratio of the total value of the fund (cumulative distributions plus residual value) to the total capital called from LPs, indicating the overall performance of the fund.

Net asset value (NAV)

The value of the fund’s assets minus its liabilities, representing the current value of the fund.

Committed capital

The total amount of capital that LPs have committed to invest in the fund.

Capital gains tax

The tax on the profit realized from the sale of a non-inventory asset.

QSBS exclusion

A tax benefit allowing exclusion of capital gains from the sale of qualified small business stock under Section 1202.

Tax loss harvesting

A strategy to sell securities at a loss to offset a capital gains tax liability.

Carried interest tax treatment

The favorable tax treatment of carried interest as long-term capital gains rather than ordinary income.

Net investment income tax (NIIT)

An additional 3.8% tax on investment income for individuals with high net income.

State and local tax (SALT) deduction

The deduction of state and local taxes paid from federal taxable income, subject to a cap.

Charitable contributions of appreciated stock

Donating appreciated stock to charities to receive a tax deduction for the fair market value while avoiding capital gains taxes.

Deferred compensation plans

Plans that delay income recognition to future years, potentially at lower tax rates.

1031 exchange

A strategy to defer capital gains taxes on real estate by reinvesting proceeds into similar properties.

Estate tax planning

Techniques to reduce estate tax liability through gifting, trusts, and other strategies.

Return on investment (ROI)

A measure of the gain or loss generated on an investment relative to the amount of money invested.

Customer acquisition cost (CAC)

The cost associated with acquiring a new customer.

Customer lifetime value (LTV)

The predicted net profit attributed to the entire future relationship with a customer.

Churn rate

The percentage of customers who stop using a product or service during a given period.

Net promoter score (NPS)

A metric that assesses customer loyalty and satisfaction by subtracting the percentage of detractors from promoters.

Annual recurring revenue (ARR)

The annualized value of recurring revenue from subscriptions.

Monthly recurring revenue (MRR)

The monthly value of recurring revenue from subscriptions.

Gross margin

The percentage of revenue that exceeds the cost of goods sold, indicating the financial health of a company.

Earnings before interest and taxes (EBIT)

A measure of a company's profitability that excludes interest and income tax expenses.

Weighted average cost of capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets.