VC jargon is the defacto manner in which investors talk all the time. It makes them look and feel cool, however, it's usually the first time founders, or interns, or doe-eyed analysts who may not understand all the terms fully, and get super confused.
So today, we are creating a list of jargons (in alphabetical order) to help you understand some of the VC slang in plain English!
In case you have a better or simpler explanation or would like to add some to the list, ping me at firstname.lastname@example.org
Now, onto simplifying complex words! Today, starting with the Letter 'A'
Accelerated vesting is a form of vesting that takes place at a faster rate than the initial vesting schedule. This allows the option holder to receive the monetary benefit from the option much sooner. The conditions or events upon which accelerated vesting occurs are usually determined in the shareholders’ agreement. Typically, accelerated vesting is triggered by an exit, but an involuntary termination of employment can also be a trigger event.
Accelerators are institutions aimed at promoting and accelerating the development of startups by providing to the startups coaching, various support functions, and facilities (e.g. office space, infrastructure) for a fixed period of time. In return, the accelerator usually receives an equity stake in the startup. For example, Upekkha is a SaaS Accelerator.
A program that is run by an accelerator. Usually, accelerator programs are structured and the more prestigious and successful an accelerator program is, the more rigorous the selection process can be.
An acqui-hire is when a company acquires a startup to obtain the startup's team, rather than to own its products or technology, which it often kills after the purchase. It has become an increasingly popular hiring method, especially to gain access to talents that are not on the job market.
The process of taking over a controlling interest in another company is called an acquisition. The term also describes any deal where the bidder ends up with 50 % or more of the company taken over.
The first limited partner to commit to a fund is sometimes called the anchor investor.
An angel investor is a person who provides a small amount of capital to a startup for a stake in the company. Such an angel investment typically precedes a seed round or angel round and usually happens when the startup is in its infancy. Although angel investors are rarely involved in the management of the startup, they often add value through their contacts and expertise. Malpani Ventures is an angel investing firm.
Anti-dilution provisions are provisions in the shareholders’ agreement that are intended to protect the investor by preventing a subsequent issue of shares from being made at a lower price than the investor originally paid. This protects the original investment or value from being diluted. Examples of commonly-used anti-dilution protection include broad-based weighted average ratchet, narrow-based weighted average ratchet, and full ratchet anti-dilution. We prefer a broad-based weighted average.
An asset deal is an acquisition in which the buyer acquires from a company (essentially) all assets of the business or a part of its business. This usually happens before an acqui-hire, where the acquiring company buys all the IP of the target company for a nominal sum before shutting it down.