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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C-Corporation -  A legal structure, preferred by investors and many entrepreneurs of startup companies seeking funding.  Like Limited Liability Companies, (LLCs) and S-Corporations, C-Corporations protect shareholders from liability in the event of a legal issue or bankruptcy.  Unlike LLCs and S-Corporations, C-Corporations may not make an election to pass corporate income, deductions and losses to shareholders for federal tax purposes.  However, C-Corporations have no limits on the number of shareholders which may own their shares. Entrepreneurs and investors typically prefer that their startup's C-Corporation be registered  in Delaware. However, Nevada and Wyoming are becoming increasingly popular. Additionally, many entrepreneurs chose to register as a C-corporation in their own state.6
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CAC -  Customer Acquisition Cost
CAGR -  Compound Annual Growth Rate.
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Call -  A contractual term/condition which provides the company the option to compel the investor to sell their shares.6
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Call Option -  The right to buy a security at a given price (or range) within a specific time period.3
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CAO -  Chief Analytics Officer.
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CAO -  Chief Accounting Officer
Cap -  The maximum company valuation at which a convertible note will convert into a company's stock.7
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CAPEX -  Capital Expenditures
Capital -  Financial capital is a term that can refer to the money exchanged between entrepreneurs and investors during a business deal. Entrepreneurs need to raise capital for their startups while investors can provide them with the needed capital (or funding). Financial capital usually comes with interest, and new business owners can use their financial capital in purchasing real capital (or machinery or equipment) for their new business.4
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Capital Expenditures -  Capital Expenditures is money spent by a company to add or expand property, plant, and equipment assets, with the expectation that they will benefit the company over a long period of time (more than one year).9
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Capital Gains - 
  • The difference between an asset’s purchase price and selling price, when the selling price is greater. Long-term capital gains (on assets held for a year or longer) are taxed at a lower rate than ordinary income.3
  • Capital Gain is the gain to investor from selling a stock, bond or mutual fund at a higher price than the purchase price. The capital gain is usually the amount realized (net sales price) less your investment (adjusted tax basis) in the property. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.5

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Capital Under Management -  The amount of capital available to a angel or VC Fund's management team for startup venture investments.6
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Capitalization Table -  A table depicting the quantity of shares or unit ownership which is held by each investor in a corporation or LLC, typically including founders' equity, investor equity, and advisor / employee Stock Option Pools.6
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Capitalize -  To record an outlay as an asset (as opposed to an expense), which is subject to depreciation or amortization.3
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CAPM -  Capital Assets Pricing Model
Carried Interest -  or “Carry3” The portion of any gains realized by the fund to which the fund managers are entitled, generally without having to contribute capital to the fund. Carried interest payments are customary in the venture capital industry, in order to create a significant economic incentive for venture capital fund managers to achieve capital gains.3
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Cash Position -  The amount of cash available to a company at a given point in time.3
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CCE -  Society for Corporate Compliance and Ethics
CDO -  Chief Data Officer
CEO -  Chief Executive Officer
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CfIRA -  Crowdfunding Intermediary Regulatory Advocates
CFO -  Chief Financial Officer.
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CFP -  Certified Financial Planner
CfPA -  Crowdfunding Professional Association
Chapter 11 -  The part of the Bankruptcy Code that provides for reorganization of a bankrupt company’s assets.3
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Chapter 7 -  The part of the Bankruptcy Code that provides for liquidation of a company’s assets.3
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Chief Analytics Officer - 

The senior executive officer responsible for the analytical aspects of a corporation / company.6

Chief Executive Officer -  The senior executive officer responsible for the overall management of a corporation / company.6
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Chief Financial Officer - 

The senior executive officer responsible for the financial aspects of a corporation / company.6

Chief Information Officer - 

The senior executive officer responsible for the informational aspects of a corporation / company.6 

Chief Marketing Officer - 

The senior executive officer responsible for the marketing aspects of a corporation / company.6

Chief Operations Officer - 

The senior executive officer responsible for the operational aspects of a corporation / company.6

Chief Security Officer - 

The senior executive officer responsible for the security aspects of a corporation / company.6

CIM -  Confidential Information Memorandum
CIO -  Chief Intelligence Officer
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CIO -  Chief Information Officer
Claim Dilution -  A reduction in the likelihood that one or more of the firm’s claimants will be fully repaid, including time value of money considerations.3
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Clawback -  A clawback obligation represents the general partner’s promise that, over the life of the fund, the managers will not receive a greater share of the fund’s distributions than they bargained for. Generally, this means that the general partner may not keep distributions representing more than a specified percentage (e.g., 20%) of the fund’s cumulative profits, if any. When triggered, the clawback will require that the general partner return to the fund’s limited partners an amount equal to what is determined to be “excess” distributions.3
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Closed-end Fund -  A type of fund that has a fixed number of shares outstanding, which are offered during an initial subscription period, similar to an initial public offering. After the subscription period is closed, the shares are traded on an exchange between investors, like a regular stock. The market price of a closed-end fund fluctuates in response to investor demand as well as changes in the values of its holdings or its Net Asset Value. Unlike open-end mutual funds, closed-end funds do not stand ready to issue and redeem shares on a continuous basis.3
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Closing - 
  • An investment event occurring after the required legal documents are implemented between the investor and a company and after the capital is transferred in exchange for company ownership or debt obligation.3
  • This is the transaction that occurs after entrepreneurs and investors legally exchange all required legal documentation and capital that is needed in their business deal. When an investor “closes in on a deal,” they have already negotiated with the entrepreneur the details encompassing corporate ownership and monetary obligation.4
  • Closing is the final event to complete the investment, at which time all the legal documents are signed and the funds are transferred.5

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CLTV -  Customer Lifetime Value
CMO -  Chief Marketing Officer.
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CMS -  Content Management System
Co-invest -  When more than one investor joins in making an investment on similar terms.7
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Co-investment -  The syndication of a private equity financing round or an investment by an individual (usually general partners) alongside a private equity fund in a financing round.3
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COB -  Close of Business
COGS -  Cost of Goods Sold
Collar Agreement -  Agreed-upon adjustments in the number of shares offered in a stock-for-stock exchange to account for price fluctuations before the completion of the deal.3
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Collateral -  The Property or other assets a borrower uses to secure a loan. If payments are not made, the lender can seize the collateral to recoup its loss. Secured (collateralized) loans are less risky to lenders and they are therefore, more likely to make loan.6
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Committed Capital -  The total dollar amount of capital pledged to a private equity fund.3
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Common Stock - 
  • A class of ownership that has lower claims on earnings and assets than Preferred Stock. It is riskier to own common stock because in the event of Liquidation, common stock shareholders are the last to claim rights to assets.2
  • A unit of ownership of a corporation. In the case of a public company, the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in some cases receive dividends on their holdings. Investors who purchase common stock hope that the stock price will increase so the value of their investment will appreciate. Common stock offers no performance guarantees. Additionally, in the event that a corporation is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock take precedence over the claims of those who own common stock.3
  • This term represents a constituent in corporate ownership. People who own shares of common stock (common stockholders) often have voting rights in their company’s decision-making matters and executive board of elections.  Through company dividends and capital appreciation of corporate assets, common stockholders can also share in their company’s financial success.4

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Company By-Laws -  Written agreements established for the purpose of defining how corporations will operate and be managed. They are established specifically for corporations as opposed to LLCs and therefore also deal with issues related to the boards and issuance of shares such as shareholder rights, provisions to select officers and directors and delineation of the various governance rules under which the corporation operates.6
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Compound Annual Growth Rate - 

The year-over-year growth rate applied to an investment or other aspect of a firm using a base amount.3

Conversion Ratio -  The number of shares of stock into which a convertible security may be converted. The conversion ratio equals the par value of the convertible security divided by the conversion price.3
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Convertible -  Convertibles are the corporate securities, usually preferred shares or bonds, that can be exchanged for a set number of another form, usually common share, at a pre-stated price. Convertibles are appropriate for investors who want higher income than is available from common stock, together with greater appreciation potential than regular bonds offer. From the issuer's standpoint, the convertible feature is usually designed as a sweetener, to enhance the marketability of the stock or preferred.5
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Convertible Note -  A debt instrument that can be converted into another security, such as shares of common or preferred stock.6
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Convertible Preferred Stock -  Preferred stock that may be converted into common stock or another class of preferred stock, either voluntarily or mandatory.3
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Convertible Security -  A bond, debenture or preferred stock that is exchangeable for another type of security (usually common stock) at a pre-stated price. Convertibles are appropriate for investors who want higher income, or liquidation-preference protection, than is available from common stock, together with greater appreciation potential than regular bonds offer. (See Common Stock, Dilution, and Preferred Stock).3
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COO -  Chief Operating Officer.
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Corporate Charter -  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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Corporate Resolution -  A document stating that the corporation’s board of directors has authorized a particular individual to act on behalf of the corporation.3
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Corporate Venture -  An investment from one corporation in another, typically at an early stage for strategic reasons.7
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Corporate Venture Capital -  Corporate venture capital is a subsidiary of a large corporation which makes venture capital investments.5
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Corporate Venturing - 
  • Venture capital provided by [in-house investment funds of] large corporations to further their own strategic interests.3
  • Corporate Venturing is a practice of a large company, taking a minority equity position in a smaller company in a related field.5

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Corporation -  A legal entity structure for businesses enterprises which are typically chartered by a state or the federal government, under which ownership is held by shareholders.6
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Covenant -  A protective clause in an agreement.3
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Coverage Ratio -  A measure of a company’s ability to pay its debts and meet its financial obligations.6
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CPA -  Cost per Acquisition
CPA -  Certified Public Accountant
CPC -  Cost per Click
CPC -  Cost per Conversion
CPL -  Cost per Lead
CPU -  Central Processing Unit
CPU -  Cost per Unit
CR -  Conversion Rate
CR -  Credit
Cram Down -  AKA. Burn Out - Extraordinary dilution, by reason of a round of financing, of a non-participating investor’s percentage ownership in the issuer.3
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CRM -  Customer Relationship Management
Crowdfunding -  “Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”), rather than the alternative pattern of larger amounts from a smaller number of supporters.  Charities and philanthropies have traditionally employed both fundraising strategies (soliciting both the general populace, or crowd, as well as fewer wealthier donors), while businesses have usually taken the route involving fewer and larger supporters.  Today’s internet has vastly increased the ability of fundraisers to communicate information, solicit and receive financial support from anyone on-line. Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing, and have never been illegal in the U.S.  In contrast, soliciting funds in return for a ownership interest or expectation of repayment, are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and have been until now governed (and effectively prevented) by federal and state securities law.  One of the most significant parts (Title III) of the federal “Jumpstart Our Business Startups”, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding”, subject to a variety of regulations and restrictions.1
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Crowdfunding Intermediary Regulatory Advocates -  (CfIRA) An open organization of diverse participants and parties interested in the crowdfunding industry (“portals”, “broker-dealers”, professional and business service providers, investors, etc.) dedicated to interacting with each other and advocating with the regulators charged with shaping and governing the nascent industry of securities-based crowdfunding authorized by the JOBS Act.  CfIRA has participated in numerous hearings, written official letters as well as popular articles, etc., both in public as well as government forums (Congress, SEC, FINRA, etc.)  See http://www.cfira.org for more information.1
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Crowdfunding Professional Association -  (CfPA) The American industry trade organization dedicated to facilitating a vibrant, credible and growing crowdfunding community, from investors through service providers to entrepreneurs.  See http://crowdfundingprofessional.org for more information.1
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CSO -  Chief Security Officer
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CT -  Cap Table
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CTA -  Call to Action
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CTO -  Chief Technical Officer
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CTR -  Click-through Rate
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Cumulative Preferred Stock -  A stock having a provision that if one or more dividend payments are omitted, the omitted dividends (arrearage) must be paid before dividends may be paid on the company’s common stock.3
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Cumulative Voting Rights -  When shareholders have the right to pool their votes to concentrate them on an election of one or more directors rather than apply their votes to the election of all directors. For example, if the company has 12 openings to the Board of Directors, in statutory voting, a shareholder with 10 shares casts 10 votes for each opening (10x12 = 120 votes). Under the cumulative voting method however, the shareholder may opt to cast all 120 votes for one nominee (or any other distribution he might choose).3
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Customer Lifetime Value -  A forecast or prediction of the total net profit related to the entire lifetime, (present and future) of a specific customer relationship.6
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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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