Do you speak VC? 30+ jargons and acronyms you should know
Every time I jumped into a new industry (4 years ago it was Investment Banking, 3 years ago Tech VC) for the first couple of months I had to catch up with the new jargon and funny abbreviations. This is why I am creating a list of acronyms and tech VC slang that I hope is useful for you.
I will constantly update the list and in case I missed something leave a note or a comment, or ping me at: federico.wengi@pauaventures.com.
I hope this serves as a small service for founders or VC Interns/ Analysts without a financial background. Should you need to dig deeper in some topics I can suggest the following sources:
- Investopedia for general financials
- A16z blog for startup metrics
- Acronym Finder for general abbreviations
VC/ Legals
TS = Term Sheet, a sheet summarizing the commercials of an investment agreement contract
SHA = Shareholders Agreement, the contract defining the relationship amongst the company and the shareholders and amongst the shareholders
CT = Cap Table or Capitalization Table, a document (usually a spreadsheet) that states who owns what % of shares in the company
ROFR = Right of First Refusal, in case existing shares of the company are sold, shareholders with a ROFR will have the option to buy those shares, ratably, before they are offered to new investors
Liq Pref = Liquidation Preference, a right attached to a specific class of shares that regulates the order of priority in case of a liquiditiy event (simply put: who gets the $ first in case there is not enough to make everybody happy)
Pre = Pre Money or Pre Money Valuation, one key term of the term sheet, it is the valuation of the company that determines the price per share for a capital increase
Post =Post Money or Post Money Valuation, Post = Pre + capital injection
LPs = Limited Partners, these are the investors of the VC funds
GPs = General Partners, there are commonly known as Partners and are the manager of the VC fund, deciding the allocation of the investments
General Financials
KPIs = Key Performance Indicators, a set of numbers/ ratios displaying the performance of a company
GMV = Gross Merchandise Value, total monetary value of transactions taking place on a marketplace
MRR = Monthly Recurring Revenues, the kind of revenues that SaaS and subscription based companies are earning
ARR = Annual Recurring Revenues, MRRx12
EBITDA = Earnings Before Interests Taxes Depreciation Amortization
EBIT = Earnings Before Interests Taxes
COGS = Cost Of Goods Sold
LTM = Last Twelve Months
YTD = Year To Date
MoM = Month on Month
YoY = Year on Year
H1/H2 =1st Half of the year/ 2nd Half of the year
Q1/Q2…= 1st Quarter of the year/ 2nd Quarter of the year…
FY = Fiscal Year
CAGR = Compound Annual Growth Rate
CAPEX = Capital Expenditure, expenditures required by a company to improve operations, it can be for example the purchase of machinery and properties
IPO = Initial Public Offering, when a company offers its shares to the public markets and gets listed
VC Financials
ROI = Return On Investment, Return/ Investment -1
Money Multiple = Shares Value now/ Total Investment
Valuation Multiple = Company Valuation now / Company Valuation at the time of initial investment
IRR = Internal Rate of Return
EV = Enterprise Value, the equity value + debt value (net of cash)
NAV = Net Asset Value, the total valuation of the assets in a fund
AUM = Assets Under Management, basically how many $ a VC fund is managing
MF = Management Fees, a fixed % of the AUM through which VCs finance the fixed costs of running a VC fund
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