Fundraising and Equity Terms

A stakeholder is any individual, group, or entity that has an interest, involvement, or concern in a particular organization, project, or system. Stakeholders can significantly impact or be impacted by the activities and outcomes of the entity they are connected to.

A stock option is a derivative security that provides an investor with the opportunity to buy (through a call option) or sell (through a put option) a particular stock at a predetermined price, known as the strike price, within a specified period, known as the expiration date.

If any shareholder wants to sell their shares to someone else, all involved shall have the option to sell their shares, on the same terms, pro-rata, to the same acquirer.

A term sheet summarizes the principal terms and conditions of the proposed investment by the Investor in the Company, covering the significant aspects and establishing the basis for future negotiations. It is a crucial and required document for a financing round.

The term "termination" of the contract is generally used, but we could also use terms such as rescission, revocation, distancing from the contract, or withdrawing.

Valuation is the quantitative process of determining an asset or a company's current (or projected) worth. There are several methods for reaching a valuation - each technique may produce a different value.

The valuation cap is a negotiated maximum limit for the price at which convertible debt will become equity, protecting debtholders from situations where startups experience significant increases in value between the issuance of convertible debt and the subsequent funding round.

A venture capital fund is an investment instrument managed by a venture capital firm and often owned by investors or high-net-worth individuals.

A vesting schedule is an incentive program for employees that gives them benefits, usually stock options, when they have contractually fulfilled a specified term of employment with the company. The benefits can also be other assets, such as retirement funds. Vesting is a way for employers to keep top-performing employees at the company.

A waiver is a legally binding provision where either party in a contract agrees to forfeit a claim without the other party being liable voluntarily. Essentially, a waiver removes an actual or potential liability of the other party in the agreement.