Fundraising and Equity Terms

Due Diligence represents the process of investigating and vetting prospective companies to assess the risks of an investment. It can be seen as a standard of care that ensures making informed decisions.

EBIT / EBITA / EBITDA are some of the most used indicators to measure the operational profitability of a company. These measures are used by investors to evaluate and compare the profitability of companies, but do not take into consideration the cost of capital.

Earnings per Share is calculated by dividing the company’s net income by the number of its outstanding shares (all shares that have been issued by a company, and that are held by investors). Companies with higher Earnings per Share tend to be more profitable.

ESCROW is a legal concept describing a financial instrument whereby a third party holds money (or an asset) on behalf of two other parties that are in the process of completing a transaction. ESCROW accounts might require escrow fees, charged by the agents holding the funds or assets, until receiving appropriate instructions or until the predetermined contractual obligations are fulfilled.

The exercise price is used for underlying security that can be purchased/sold when trading a call/put option, respectively. It is also referred to as “strike price” and is known when an investor initiates the trade.

Early-stage businesses usually have a tested prototype or service model and have already developed a business plan. This is the riskiest stage in the start-up life cycle and success is highly dependent on this phase.

Education Technology focuses on bringing technology tools into the classroom to improve education. The goal of this industry is to improve student outcomes, enhance individualized education, increase student engagement and reduce problems that teachers could encounter.

It is a term used to describe a brief speech that outlines an idea for a product, service, or project. The name comes from the idea that the speech should be delivered in the short time offered by an elevator ride. A good rule of thumb is that an elevator pitch should be ideally 30 seconds long (and a maximum of 60 seconds).

It is an employee benefit plan that offers employees ownership in the company. Employee Stock Option Plans (ESOPs) are tax-efficient and benefit sponsors, the selling shareholders, and the participants.

Enterprise Software is a general term referring to software used in large organizations, both governmental and business ones. It provides business-focused tools that improve enterprise productivity and efficiency.