Glossary

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

Terms beginning with: V


Validation

The purpose of validation is to prove that a business concept really makes sense. Depending on the desired level of validation, this may be product/market fit (proof that there are some willing buyers) or traction (proof that there are many/enough willing buyers). Related: Follow-on rounds and Stages

Valuation

The estimation of the monetary value of a company. There is a range of different methods for determining the value depending on the company's development stage and industry.

Venture capital

An institutional source of financing for startup companies made by entities and individuals seeking higher returns for taking greater risks. Also called risk capital. Startups talk to venture capitalists, who in turn manage funds contributed by limited partners.

Vesting

In order to keep the interests of all parties aligned, it is common that some stock is reserved for founders (sometimes also for early employees or partners), but they have to earn it over a predetermined period time (three years, for instance). If they leave the company earlier, they will only get a part of the stock.

Vesting period

Please see Vesting

Veto rights

The power (in the context of investments usually of minority shareholders) to stop predefined business actions, usually those with far-reaching consequences, such as selling significant parts of the company. Related: Voting rights

Voting rights

Rights that regulate how shareholders can vote on matters or strategic importance, such as electing members of the board of directors.

Voting trust

An entity to which one or more shareholders have transferred their voting rights. Transferring the voting rights may accompany the transfer of shares. This is usually done for a defined period of time.