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There are a lot of ways to get tripped up while building a company. Failing to understand financial jargon shouldn’t be one of them.
It’s not that investors and venture capitalists are evil or anything. It’s just that their interests don’t perfectly align with those of entrepreneurs. You want to build a company, keep control and earn a fair share of any windfall. Investors want to profit from your company as much as possible, minimize their financial risk and, often, gain the operating control needed to do so. Balancing these interests is a delicate process that requires a clear-eyed understanding of the terms involved during negotiations.
So in the tsunami of legalese that entrepreneurs face during fundraising discussions, FORBES has uncovered 10 terms that we think are essential to understand. A familiarity with the phrases below will help you avoid needlessly giving up equity, control and profits in the event of a successful exit. This post is no replacement for a lawyer, but it will help you, hopefully, call BS on less-than-forthcoming investors. (For a quick summary of the terms, check out the full list here.
One of the most important mantras for success is determining how to get more from less.
That’s why when I think about the first 90 days on a job, I am thinking about how to steal days and gain time long before Day One begins. Think about how much common sense this makes. You’ve just gone through this big dating process and you’ve selected The One… and then you won’t see them again until your wedding day. That doesn’t make any sense! Spend time together, get to know one another better and determine how you collaborate together in this in-between period.
Of course I first learned the value of this method the hard way. In 1999, eBay was experiencing big problems, punctuated by a huge outage in June. That’s exactly when CEO Meg Whitman recruited me to join. I was in Asia on another project at the time, but the headhunter contacted my wife, Irene — she knew how decisions got made in my house — who immediately called me, “I think you should consider this eBay thing.” She wanted to move back to Silicon Valley and she liked the idea of me working for a woman CEO.
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