The Great Glossary: Terms Every Entrepreneur Needs to Know
Issue Number 1 of the Great Glossary: Are You Investment Ready?
The Ye! Community has compiled a list of words used often within the world of entrepreneurship and startup culture. The definitions below will be helpful to anyone wanting to understand how the small business world works (and understand how crazy and disfunctional entrepreneurship terms can be). We will keep adding more relevant terms to help make sense of the most frequently used entrepreneurial terminology.
Accredited Investor--Someone who has acquired a large wealth they are willing to invest. An investor who can prove they are making enough to be investing large amounts into your startup.
Read about Accredited Investors in more detail.
Angel Investors-- Angel investors invest in small startups or entrepreneurs.They are individuals or a small group of investors who take high risks and help build the capital gap between an entrepreneur’s resources and the traditional financial markets, including venture capital markets. They obtain the return on investments (ROI) after the companies in which they have invested in experience, liquidity events, are acquired, merged or have an IPO, or are bought out by the later stage investors.
Read about Angel Investors in more detail.
Vesting Period--A period of time an investor holding rights to a company must wait until they are able to fully exercise their rights. Essentially, earned ownership over time.
Read about Vesting Period in more detail.
Seed Investor--An investor who invests in the very early stages of your business. The investor usually invests in an initial round of funding.
Read about Seed capital and investors in more detail.
Seed Money-- Think of seed money as well... water for your seed. What does a flower need to bloom? Water. Without that initial money your seed will never sprout. This is initial funding that most small businesses/start-ups rely on. Seed money can be found in many places, check here for some great seed resources.
Read more about Seed Money.
Cottage Business-- A Cottage Business is usually operated from home, with typically no more than 2 employees. Cottage businesses tend to be part-time in nature, but do not have to be. The focus is normally on manufacturing or production. Service type businesses are not included in the cottage business model, it is more labour intensive. A business which investors have deemed does not have a good potential for scalability.
Read more about Cottage Industry in detail.