Venture Capital Jargon
I was actually looking for something else online, when I came across this very interesting article on Understanding Venture Capital Jargon
Want to know the answer to questions like:
What does monthly burn rate mean?
A company’s burn rate is, quite simply, the speed at which a company is “burning through cash.” You may also hear venture investors call this number the “monthly nut.” So how much are you currently spending each month? That’s your burn rate.
What is a pre-money valuation?
While most entrepreneurs believe that their business ideas are worth gazillions, your pre-money valuation is what you say your company’s worth is today. A post-money valuation is the sum total of your pre-money valuation and the amount of new investor funding.
For many more Jargon Busting explanations and answers to other VC questions I highly recommend: Understanding Venture Capital Jargon
Note: In case when reading the article, you wonder what LOI stands for – the answer is Letter of Intent.
A letter of intent or LOI is a document outlining an agreement between two or more parties before the agreement is finalized. The concept is similar to the so-called heads of agreement. Such agreements may be Asset Purchase Agreements, Share Purchase Agreements, Joint-Venture Agreements and overall all Agreements which aim at closing a financially rather large deal.
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I’m looking to learn more about the valuation of web sites. These two metrics will help me build my business. Thanks for the info.
To not get burned, I only spend money that my site has brought in. Say my site makes $500. I will spend maybe half of that on private ads and such. You will slowly climb up the latter and be able to play with more money. Eventually you will be making the money you want for profit, and still have site money to play with.