BUSINESS Flashcards
IPO (initial public offering)
When a private company goes public by offering shares of their company to the public (outside investors).
Benefits for IPO
It can raise capital / scale the business due to outside investors investing in stock/shares.
SEC (securities exchange commission)
Government branch that oversees / reviews if a public company is ready to go public.
Shareholder
Is a person or company that holds shares within a companies stock.
They get to vote on issues that effect the company.
Unicorn
Startup that’s valued at 1billion
Shares
Unit of Equity of ownership in a company.
Common Stock
People that hold some time of ownership within the company.
Underwriter
Works with the company to Evaluate and determine the set price of the IPO stock
TAM (total available market)
Total demand for your product globally. With only one provider.
SAM (serviceable available market)
The portion of the market that’s attainable for your business.
SAM can be due to specialization in your business or geographical location.
SOM (serviceable obtainable market)
How many customers would realistically buy your product.
Term Sheet
Agreement between company & investor before a deal is finalized (during seed round).
Angel Round / Angel Investor
Company is launching, funds for day to day operations, hire team.
Investors invest for small equity.
Family & Friends
Series A
Startup faze. Shares for funding.
Finanical risk - investor
Series B
Sign of growth:
customer base, performance, proven product & services.
Revenue predictions / forecast.
Series C
Company is preparing for rapid growth. Proven track record, sales, scaled up and developed new products and services.
Wants to make acquisitions to competing companies.
Bridge
Pre- merger / acquisition of a company or pre IPO.
LTV(lifetime value)
Be able to track the average revenue you make off a customer during the entire time they are customer.
Average revenue a customer will generate during the lifespan of them being a customer.
Key to metric when you have a subscription base model.
Example:
Monthly cost of subscription divide by the number you lose a customer.
$10 x 5 (months) = $500 (average price a customer stays with me)
Key, have a retention strategy.
Build add on subscription model
CAC(customer acquisition cost)
The cost it takes to acquire a new customer.
Example:
Sales & Marketing Expense / Number of New Customers
$100 / 5 = $50 (to gain a new customer).
Private Equity Fund
Investing in business that are private / not trading
Venture Capital Fund (VC)
Investing in startups with the potential for long term growth.
Preferred Stock
Ownership in a company stock over Common Stock, higher dividends & assets.
