Total Cost of Ownership (TCO)
The estimate of all direct and indirect costs associated with an asset or acquisition over its entire life cycle.
Finance
Pre-Money Valuation
The valuation of a company before outside financing and capital injections are added to its balance sheet.
ROI (Return on Investment)
A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of different investments.
Market Capitalization
The total value of a company’s outstanding shares of stock, calculated by multiplying the share price by the number of shares.
MRR (Monthly Recurring Revenue)
The amount of revenue a subscription-based business receives per month.
Exit Strategy
A plan devised by a business owner to sell their stake in a company or dispose of it in order to achieve specific objectives.
Initial Public Offering (IPO)
The first time that the stock of a private company is offered to the public.
Liquidity Event
An event that allows founders and early investors to sell some or all of their shares to the public or another company.
Dilution
The reduction in ownership percentage and value per share when additional shares are issued.
Discount Rate
The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.
Due Diligence
An investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material.
Earnings Before Interest and Taxes (EBIT)
A measure of a company’s profitability that excludes interest and income tax expenses.
ARR (Annual Recurring Revenue)
The value of the contracted recurring revenue components of your term subscriptions normalized to a one-year period.
Asset Management
The practice of managing a company’s or individual’s assets, including tangible and intangible assets, to help achieve financial goals.
Burn Rate
The rate at which a company consumes its capital or resources before generating positive cash flow.
Cap Table (Capitalization Table)
A spreadsheet or table that shows the ownership stakes in a company, including equity shares, preferred shares, and options.
