Fundraising and Equity Terms

CLV represents the amount of money that a customer will bring to the business and its value throughout their entire time as a paying customer. The way this is typically calculated is by multiplying the average purchase amount per year by the average retention time in years. This gives an idea of what value an average customer brings to the company.

Cybersecurity represents the use of technology and processes to protect devices, networks and data from malicious attacks. Some types of cybersecurity include network security (protecting a computer network from attacks or malware), application security (keeping software and devices free of security threats) and information security (keeping data private and safe).

In the case of a lawsuit, D&O Indemnities is an insurance that covers directors and officers, or their company or organization. Through Indemnification, the company reimburses for losses or advancement of defense costs. They are meant to cover the expenses regarding any lawsuit, such as defense fees. Most of them exclude fraud and criminal offences.

The day-to-day investor is a person looking to invest in startups driven by its passion for ideas, products or the team building it. It is the unsophisticated version of a venture capitalist who would rather choose to be part of a community rather than drive its decision solely based on revenue-generation.

DevOps represents the combination between the development team and operational one where constant collaboration is practiced through the entire lifecycle of a product.

Share dilution is when a company issues additional stock, reducing the ownership proportion/percentage of a current shareholder. The dilution only impacts the voting rights and ownership percentage, while it does not affect the value of the share.

The disclosure letter is an essential document in the process of selling or buying. The seller can make 'disclosures' regarding the warranties. If done correctly, both parties can benefit (seller & buyer).

Also known as "conversion discount", it represents a way to lower the debtholder's convertible conversion price. For example, a convertible note with 20% discount allows convertible debt holders to convert to stock at 80% (or "20% off") of the share price paid in the subsequent funding round as a reward for the increased risk investment.

Decided by the company's board of directors, a dividend represents a distribution of rewards given to the shareholders. The company's profit can be reinvested in the business or paid to shareholders as dividends.

In case of any sale of shares resulting in a change of control over the Company (typically to accept an acquisition offer), then all other shareholders must also sell their shares, on the same terms, pro-rata, to the same acquirer. This protects everyone from one small shareholder refusing to sell their shares in an acquisition offer and blocking a deal everyone else wants to see happen.