Anti-Dilution Provision The right of current shareholders to maintain their fractional ownership of a company in the event of a down round without having to pay additional funds. Authorized Shares The maximum number of shares of stock that a company can issue. This number is specified initially in the company’s articles of incorporation, but it can be changed with shareholder approval. Generally a much greater number of shares are authorized than required, to give the company flexibility to issue more shares as needed. Also called authorized stock or shares authorized. Balance Sheet A condensed financial statement showing the nature and amount of a company’s assets, liabilities and capital on a given date. Book Value Book value of a stock is determined from a company’s balance sheet by adding all current and fixed assets and then deducting all debts, other liabilities, and the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding, and the result is book value per common share. Bridge Financing A limited amount of equity or short-term debt financing, typically raised within 6–18 months of an anticipated public offering or private placement, serving like a bridge for a company to reach the next round of financing. Burn Rate The rate at which a company expends net cash over a certain period, usually a month. Business Plan A document that describes the entrepreneur’s idea, the market problem, proposed solution, business and revenue models, marketing strategy, technology, company profile, competitive landscape, as well as financial projections for coming years. The business plan opens with a brief executive summary, probably the most important element of the document, due to the time constraints of Angels and venture capital funds.
How to Achieve Good Returns
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