Prepairing for Launch - Module 3 Raising Capital Flashcards
Who are angel investors?
Angel investors are individuals who invest personal funds in early-stage startups, often providing mentorship as well.
Who are venture capitalists?
Venture capitalists are firms or individuals managing institutional funds, investing in high-potential startups for equity.
What is pre-money valuation?
Pre-money valuation is the estimated value of a startup before receiving any external investment.
What is post-money valuation?
Post-money valuation is the value of a startup after external investment has been added.
What are preferred stock options in equity deals?
Preferred stock options give investors certain privileges, such as priority in receiving dividends or liquidation proceeds.
What is staged financing?
Staged financing is raising funds in increments as the business achieves key milestones, reducing risk for investors.
What are anti-dilution rights?
Anti-dilution rights protect investors from equity dilution during future funding rounds by adjusting their ownership percentage.
Why is relationship-building important in raising capital?
Building relationships helps entrepreneurs establish trust and credibility with investors, which is crucial for securing funding.
What factors influence a startup’s valuation?
Factors include the business plan, market potential, intellectual property, team expertise, and projected returns.
What is the difference between equity and debt financing?
Equity financing involves selling ownership stakes, while debt financing requires repayment with interest without giving up equity.
