All Money Is Not Created Equal

Appendix

Glossary

409A valuation:

An independent appraisal of the fair market value (FMV) of a private company's common stock (the stock reserved mainly for founders and employees). The 409A valuation is used to establish the exercise price for options granted to employees. The name of the valuation refers to section 409A of the IRS's internal revenue code (IRC). Performing regular 409A valuations provides protection to employees that they will not be subject to potential taxes for “cheap stock” gains in the event of a successful exit.¹

Accelerator:

A program that gives developing companies access to mentorship, investors, and other support that help them become stable, self-sufficient businesses.² Accelerators are for businesses that have developed a minimum viable product (MVP) and want to progress quickly into ramping revenues.

Acquihire:

When a company buys another company primarily for its employees instead of acquiring the company for its products or services, or its financial assets.

Angel investor:

Also known as a private investor, seed investor, or angel funder, an angel investor is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.

ARR:

The acronym for annual ...