Early-Stage A state of a company that typically has completed its seed stage and has a founding or core senior management team, has proven its concept or completed its beta test, has minimal revenues, and no positive earnings or cash flows. EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. A measure of cash flow calculated as: = Revenue – Expenses (excluding tax, interest, depreciation and amortization). EBITDA looks at the cash flow of a company. By not including interest, taxes, depreciation and amortization, we can clearly see the amount of money a company brings in. Economies of Scale Economic principle that, as the volume of production increases, the cost of producing each unit decreases. Elevator Pitch An extremely concise presentation of an entrepreneur’s idea, business model, company solution, marketing strategy and competition delivered to potential investors. Should not last more than a few minutes, or the duration of an elevator ride. Equity Ownership in the capital of a company. In corporations, it is called “shares” or “stock”; in limited partnerships or LLCs, it is called “interests” or “units.” Equity Kicker Option for private equity investors to purchase shares at a discount. Typically associated with mezzanine financings, where a small number of shares or warrants are added to what is primarily a debt financing.
Exercise Price The price at which an option or warrant can be exercised.
102 A Practical Guide to Angel Investing: How to Achieve Good Returns
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