Glossary

Glossary created by Funderbeam. Contributions from the Business Angel Institute and Invesdor.com

Terms beginning with: I


Incubators

Facilities established for startups and companies in the early stage for the purpose of supporting them with office space, management training, marketing, or access to financing. Incubation programs are often sponsored by economic-development organisations, government entities, or academic institutions. Related: Accelerators and Public funding

Inflection point

Please see Hockey stick

Information rights

Often used in the shareholders agreement and mainly designed for minority investors to secure their access to crucial information regarding the company in which they have invested.

Initial public offering

Usually referred to as an IPO, it is a securities transaction where a company offers its stock to the public for the first time. Related: Exit channels

Intellectual property rights

Legal rights of owners of intangible assets such as trademarks, copyright, patents, designs, and trade secrets.

Internal rate of return

Interest rate used to measure the profitability of investments which makes the net present value of all cash flows from a particular project equal to zero.

Investment agreement

A contract that states the rights and obligations of parties to an investment. The agreement can be made between investors, investors and an investment manager, etc.

Investment bank

A regulated financial institution that provides various financial consulting services such as capital-raising, M&A, trading, etc.

Investor roles

Different investors can provide different kinds of support to their portfolio companies, especially among business angels. They can act as advisors, board members etc. Economist Roland Engel describes five early-stage investor types: Cowboy (provides all resources except materials), Big Boy (financial investor), Landlord (assists startups through infrastructure or tangible materials), Co-founder (actively participates also on the operational level), and Godfather (has a strong network, participates in management).

If several investors invest in the same company at the same time, they can distribute their work among themselves. One can then distinguish  different investor roles during the investment process itself. Related: Lead investor

IPO

Please see Initial public offering

IRR

Please see Internal rate of return

Iteration

The process of (usually planned) repetitions of particular actions with the goal of getting better results each time due to learning effects. Iteration is important in the Lean startup movement which focuses on iterating and reengineering products and services on the basis of customer feedback.