Angel Investing: Investing with own money in early stage companies in exchange for ownership equity. An angel typically invests $25-$100K per deal. With Angel Squad, you can invest as little as $1k because we syndicate our deals.
🎓 Elizabeth Yin on $1k checks 🐦
Annual Recurring Revenue (ARR): Refers to revenue, normalized on an annual basis, that a company expects to receive from its customers for providing them with products or services. Essentially, annual recurring revenue is a metric of predictable and recurring revenue generated by customers within a year. A multiple is often applied to this figure to generate the valuation. A SaaS business' multiple may be 10x, while a CPG business' might be 1-3x.
Accelerator: Designed to support the development of startups through resources (office space and mentorship). Oftentimes a seed investment (usually $20-50K) is made in return for equity. Startups are admitted in classes and work in groups for 3-6 months, learning to pitch and develop their startup. Accelerator programs end with a demo day in which startups pitch to investors.
🎓 Elizabeth Yin on accelerators and accelerator interviews 🐦
Burn Rate: The amount that a startup is spending, typically expressed as a monthly figure. For a deeper dive, check out what Mark Suster has to say.
Capitalization Table (Cap Table): Denotes how much stock ownership is held by each entity/person. Typically includes founder/investor equity, and employee stock option pool.
🎓 Elizabeth Yin on Cap Table 101 for new founders 🐦
Churn rate: Sometimes called attrition rate, this is the percent of customers leaving a startup in a specified period (usually monthly or annually). It is the opposite of a retention rate. More on how a small change in churn rate has big impacts.
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.
Cost of goods sold (COGS): the direct cost to produce a product/service. Sales minus COGs = gross margin.
🎓 Elizabeth Yin on margins in a business
🎓 Elizabeth Yin's questions for founders
Customer Acquisition Cost (CAC): Calculated by dividing total sales & marketing cost by the number of customers acquired in that period.
🎓 Elizabeth Yin on customer acquisition costs and payback 🐦
🎓 Elizabeth Yin on marketing funnels and customer acquisition 📹
Daily Active Users (DAU): Total number of users that engage in some way with a web or mobile product on a given day. Sometimes founders also track Monthly Active Users (MAU). Read this article for how this number can be manipulated.
Defensible moat: a defensible moat (also known as a business or economic moat) is a company's sustainable competitive advantage that enables it to outperform in profits and market share.
🎓 NFX on defensibility