Venture Capital Consultants Key Terms

Understand common terms related to start-up funding

By Kristina Seleshanko

Venture capital consultants wield a wide variety of terms the average business owner might not recognize. Some refer to laws and regulations covering the investment field, some refer directly to financing, and still others are colorful slang specific to venture capitalism and start-up funding. With that in mind, you may want to take the time to learn venture capital key terms. Here are a few common terms related to venture capital consultants and new businesses or products.

Accredited investor

Accredited investor is a definition set up by United States Securities and Exchange Commission. An accredited investor is an individual with a net worth of over $1 million or an individual with an income exceeding $200,000.
Try: The U.S. Securities and Exchange Commission goes into further detail about the exact nature of an accredited investor.

Angel

An angel, or "angel investor," is an individual who offers financial backing in the beginning and early stages of a new business or developing product.
Try: Small Business Notes explains in detail what an angel is and how angel investments typically work.

B round

B round financing is when venture capitalists have already given the first round, or "A round," of financing and still have enough interest in the business to provide a second round, or "B round," of financing. Later, they may provide further rounds, called "C round," "D round" and so on.
Try: Venture Capital Reporter discusses a B round of financing for Skyrecon Systems.

Burn rate

Burn rate is how quickly a company uses their net cash over a specific time period, typically, one month.
Try: You can learn more by visiting Investopedia, which explains burn rate in further detail and offers how-to information on calculating it.

Hockey stick projections

Hockey stick projections refer to a chart illustrating cash, customers, revenue or similar numbers. If the chart is a hockey stick, it shows dramatic increases in the future. Some venture capitals won't fund projects with hockey stick projections.
Try: Gaebler Ventures explains the problem with hockey stick projections and discusses how to create a more realistic projection for potential investors.

Seed money

Seed money is the first capital raised for a start up business. It's often in the form of a loan, angel investors or venture capitalists.
Try: The New York Times reports on how environmentally-centered products and businesses may have an easier time obtaining seed money.