Glossary

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

Terms beginning with: S


Scalability

The ability of a business to grow very large very fast. For example selling e-books (where delivery is cheap and delivering many more can be done almost instantly) scales better than consulting (where new employees have to be hired and trained in order to deliver more).

Screening

Please see Deal screening

Secondary purchase

Buying stock from an existing shareholder. Related to: Exit channels

Seed capital

Please see Financing rounds

Seed round

Please see Financing rounds

Seed stage

Please see Stages

Senior debt

Borrowed money that a company must repay first if it becomes insolvent. If the company goes bankrupt, the holders of each type of financing have different levels of rights to the company's assets.

Series A, B, C, etc.

Please see Financing rounds

Shareholder agreement

Agreed terms between a company's shareholders that govern its management and operation.

Sidecar funds

Co-investment funds that invest alongside defined types of transactions (for example angel rounds with a certain minimum size).

Stages

Approximate indications of the current phase of a company's development. Common terms include seed or ground floor for the very first phase, early vs. mid vs. later stage, and descriptive characterisations like proof of concept. Related: Financing rounds

Startup

A company in the early stages of development, which seeks to create a new product or service under significant uncertainty. The most attractive startups have a large growth opportunity in the first few years.

Stock option

The right to buy or sell a company's stock at predetermined conditions (price, quantity, time). Related: Stock option agreement,
Stock option plan, and Stock option pool

Stock option agreement

An agreement that gives investors, shareholders or employees the right to buy or sell stock at predetermined conditions (price, quantity, time).

Stock option plan

A benefit plan set by the company that gives investors, shareholders or employees an opportunity to buy (more) stock in the company.

Stock option pool

The total number of shares that are subject to the option rights of investors, shareholders, or employees. Related: Stock option plan

Strategic exits

An exit where the company is acquired by a strategic buyer who usually operates in the same industry. Strategic buyers integrate the acquired company into their main operations. Strategic exits typically are relatively quick exits and often command a price premium compared to financial exits at the same stage.

Subordinated debt

A loan that ranks below other loans with regard to claims on assets or earnings.

Subscription agreement

A contract that governs an investor's investment in the company.

Sustainability

Meeting the needs and demands of the present without restricting the ability of future stakeholders to meet their own needs. Sustainability is commonly classified into three pillars: economic, social, and environmental.

Syndication

Investment syndication occurs when a group of investors pool their money to finance one or more companies. One advantage for investors is that with the same total amount of invested capital, they end up with better-diversified portfolios (less risk). Another advantage is that investors can distribute the effort associated with a transaction (e.g. due diligence) among themselves.