Entrepreneur Dictionary for Startups

The entrepreneur dictionary for startups contains terms and definitions commonly used by entrepreneurs, investors, accelerators, and others who interact with startup ventures and startup financing.
For more entrepreneur resources check out our  Acronyms for StartupsInfographics, or Startup FAQ.

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A Round Financing -  "A" Round Financing - The first major round of business financing by private equity investors or venture capitalists. In private equity investing, an “A” round, or Series A financing, is usually in the form of convertible preferred stock. An “A” round by external investors generally takes place after the founders have used their seed money to provide a “proof of concept” demonstrating that their business concept is a viable and eventually profitable one. 1
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ACA -  Angel Capital Association  
Accelerated Cost Recovery System - 

The IRS-approved method of calculating depreciation expense for tax purposes. Also known as Accelerated Depreciation. 3

Accelerator -  In an Accelerator, a Seed investment is made in return for equity and usually between $15K - $50K. Startups are admitted in classes and work in groups. They are generally given a deadline to complete intensive training and iteration (typically 1 week to 6 months). Startups end an accelerator program with a Demo Day in which they pitch to investors.2 
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Accredited Investor -  An individual with $1,000,000 or more in net worth (assets - liabilities), excluding their primary residence, or $200,000 in annual income, or $300,000 of income if earned jointly with their spouse, for the previous two years with a reasonable expectation of continued income for the following year.  Note that separate definitions apply for legal entities.6
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Accrued Interest -  The interest due on preferred stock or a bond since the last interest payment was made. 3
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ACCT -  Account
Acqui-hire -  One company's acquisition of another for the primary purpose of hiring its employees, rather than for the intrinsic value of the business itself.7
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Acquisition -  A process under which a company acquires the controlling interest of another company.6
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ACRS -  Accelerated Cost Recovery System.
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Add-on Service -  Add-on Services are the services provided by a venture capitalist that are not monetary in nature, such as helping to assemble a management team and helping to prepare the company for an IPO.9
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ADR -  American Depositary Receipt
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Adventure Capitalist -  An adventure capitalist is an entrepreneur who helps other entrepreneurs financially and often plays an active role in the company's operations such as by occupying a seat on the board of directors, etc.9
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Advisor -  An individual providing business connections, guidance, advice and support to the entrepreneur as they develop and grow their startup.6
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Advisory Board -  A group of external advisors to a private equity group or portfolio company. Advice provided varies from overall strategy to portfolio valuation. Less formal than a Board of Directors.3
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Allocation -  The amount of securities assigned to an investor, broker, or underwriter in an offering. An allocation can be equal to or less than the amount indicated by the investor during the subscription process, depending on market demand for the securities.3
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Alpha Test -  Internal testing, of a pre-production model, typically on a controlled basis, with the objective of identifying functional deficiencies and design flaws.6
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Alternative Minimum Tax - 

A tax designed to prevent wealthy investors from using tax shelters to avoid income tax. The calculation of the AMT takes into account tax-preference items.3

American Depositary Receipt -  A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets. 3
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Amortization -  An accounting procedure that gradually reduces the book value of an intangible asset through periodic charges to income.3
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AMT -  Alternative Minimum Tax.
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Angel Capital Association -  A North American association of angel groups, accredited investors and family offices which promotes public policies for investors and startups. The association provides investors access to trending ideas and professional knowledge and entrepreneurs insight into how angels think. See www.angelcapitalassociation.org  for more information.6
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Angel Financing -  Seed capital raised from independently wealthy investors, for startup companies.6
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Angel Fund -  A formal or informal assemblage of active angel investors who cooperate in some part of the investment process. Key characteristics of an angel group are: control by member angels (who manage the entity or have control over the entity’s managers), and collaboration by member angels in the investment process.3
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Angel Group -  An organization composed of accredited investors which serves as a platform for them to coordinate investments in seed and early stage startup companies.  The group members typically work together consolidating their resources, expertise and capital through informal networks or formal funds.6
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Angel Investor -  Once, an unrelated individual investing monies in a business venture, often later than founders, friends and family (the “3F’s”), but before larger corporate investors such as venture capitalists (“VC’s”). The term “angel” arose in the entertainment industry, where investors would bankroll a production for a share of the profits. Now, with wealthier individuals able to invest significant funds throughout the development of a company (so-called “super-angels”), and venture capitalists sometimes investing alongside and on the same terms as angels, a more modern definition is that “angels” write checks with their own money, while “VC’s” write checks with other people’s money (venture capitalists typically raise funds from investors called “limited partners” who do not actively participate in the fund’s investment decisions and operations, whereas the VC’s act as the “general partners” making the investment decisions and overseeing the invested companies.)
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Angel Round -  A round of investment into a startup company from angel investors not previously affiliated with the founder.  Typically the first money invested in a company after the founders own money, and the founders friends and family.7
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Annex Fund -  Annex funds are side funds that can provide an extra pool of money to supplement the original VC Funds.9
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Annual Recurring Revenue - 

The recurring subscription-based revenue which software as a service / platform as a service, (SaaS / PaaS) based companies receive annually; also known as the run rate.6

Anti Dilution Provisions -  Anti Dilution Provisions are contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price. Examples include Broad-Based Weighted Average Ratchet, Narrow-Based Weighted Average Ratchet, and Full Ratchet Anti Dilution.9
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AP -  Accounts Payable
APA -  Asset Purchase Agreement
API -  Application Programming Interface
AR -  Accounts Receivable
ARC -  African Regional Conference
ARC -  Appalachian Regional Council
ARR -  Annual Run Rate
ARR -  Annual Recurring Revenue.
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Articles of Incorporation -  Documentation filed with the Secretary of State or Company Registrar which acts as a charter to document the establishment and existence of a corporation. The articles typically include the businesses name, address, a statement of business purpose, and details related to the types of stock the corporation is entitled to issue.6
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Articles of Organization -  Documentation filed with the Secretary of State which acts as a charter to document the establishment and existence of a Limited Liability Company.6
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ASP -  Application Service Provider
Assets -  This word refers to all financial resources that a corporation owns. Current assets can be any form of currency, including traded inventory, investments, and checks. Fixed assets (capital assets) consist of material goods and equipment of a company, such as the land by which the company sits on, the company building, and technological machinery. Intangible assets mainly comprise of intellectual property protection, copyrights, patents, etc.4
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ATDC -  Advanced Technology Development Center
AUM -  Assets Under Management

Notes: 

  1. Source: Crowdfunding Professional Association website
  2. Source: 37 Angels website
  3. Source: Angel Capital Association website
  4. Source: Go4Funding website
  5. Source: FundingPost website
  6. Source:  FundingSage, LLC
  7. Source:  Angel Investing,  by David S. Rose
  8. Source: Institutional Limited Partners Association website
  9. Source: Venture Choice website

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