Entrepreneur Dictionary for Startups

The entrepreneur dictionary for startups contains terms and definitions commonly used by entrepreneurs, investors, accelerators, and others who interact with startup ventures and startup financing.
For more entrepreneur resources check out our Acronyms for Startups, Infographics, or Startup FAQ.

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Family Lifestyle Business - A business established and operated by its founders for the purpose of developing and maintaining a particular lifestyle or level of income. Such businesses typically have limited scalability because of issues such as limited access to capital, owner decisions relating to business operating models and staffing and reinvestment objectives. Many are sole practitioners or small groups like husband / wife teams. They are typically highly dependent on the experience, skills, drive and engagement of the owners.⁶

FCF - Free Cash Flow

FEIN - Federal Employer Identification Number

FFF - Friends & Family Round

FFO - Funds From Operations

Fiduciary Responsibility - Refers to trust responsibility to make good investments that will earn a high rate of return.²

FIFO - First In First Out

Final Regulation - An ERISA term, it is the United States Department of Labor’s Final Regulation relating to the definition of “plan assets” in (29 C.F.R. §2510.3-101).³

Financier - Financier is a person or financial institution engaged in the lending and management of money and makes a living participating in commercial financing activities.⁵

Finder - A person who helps to arrange a transaction.³

First Stage Capital - First stage capital is the money provided to entrepreneur who has a proven product, to start commercial production and marketing, not covering market expansion, de-risking, acquisition costs.⁹

First-round Financing - First-round financing is the first investment in a company made by external investors.⁹

Flat Round - An investment round in which the pre-money valuation of a startups' round is the same as its post-money valuation from the previous round.⁶

Flipping - The act of buying shares in an IPO and selling them immediately for a profit. Brokerage firms underwriting new stock issues tend to discourage flipping and will often try to allocate shares to investors who intend to hold on to the shares for some time. However, the temptation to flip a new issue once it has risen in price sharply is too irresistible for many investors who have been allocated shares in a hot issue.³

FMA - First Mover Advantage

Follow-on Investing -

(follow-up investing) This word refers to the event whereby investors reinvest in a company sometime during its development. Often times, follow-on investments occur when a company is not performing successfully as planned. Angel capitalists tend to avoid follow-on investments within the same company because of the high risk of additional monetary loss.⁴
A subsequent investment made by an investor who has made a previous investment in the company, generally a later stage investment in comparison to the initial investment.⁵

Form 10-K - This is the annual report that most reporting companies file with the Commission. It provides a comprehensive overview of the registrant’s business.³

Form 10-KSB - This is the annual report filed by reporting “small business issuers.” It provides a comprehensive overview of the company’s business, although its requirements call for slightly less detailed information than required by Form 10-K.³

Form S-1 - The form can be used to register securities for which no other form is authorized or prescribed, except securities of foreign governments or political sub-divisions thereof.³

Form S-4 - Type of Registration Statement under which public company mergers and security exchange offers may be registered with the SEC.³

Form SB-2 - This form may be used by “small business issuers” to register securities to be sold for cash. This form requires less detailed information about the issuer’s business than Form S-1. ³

Founder's Agreement - A formal written agreement among the founders of a startup which documents the founder’s accord on ownership, roles and responsibilities, company governance / decision-making and operations. Issues such as founder contributions, vesting and exit / departure are also typically included in these Agreements. Founder’s agreements are typically shorter, less technical agreements between the founders that are to be developed further into operating agreements or corporate by-laws, as the concept and structure of the company develops. Operating agreements and corporate by-laws generally contain all of the same provisions typically included in a founder’s agreement.⁶

Founder's Stock - The common stock owned by one or more of the company's founders, typically received when the company was incorporated and not purchased for cash.⁷
- Synonyms: Founder's Equity

Founders’ Shares - Shares owned by a company’s founders upon its establishment.³

Free cash flow - The cash flow of a company available to service the capital structure of the firm. Typically measured as operating cash flow less capital expenditures and tax obligations.³

Friends & Family Round - An investment in a company that often follows the founder's own investment, from people who are investing primarily because of their relationship with the founder rather than their knowledge of the business.⁷

Friends and Family - A common way for a startup to fund their initial round of capital. A 20-25% discount from the next round is appropriate. The valuation cap is going to vary depending on the size of the raise and the size of the opportunity.²

FTE - Full Time Employee

Full Ratchet Antidilution -

The sale of a single share at a price less than the favored investors paid reduces the conversion price of the favored investors’ convertible preferred stock “to the penny.” For example, from $1.00 to 50 cents, regardless of the number of lower-priced shares sold.³
Full ratchet is an investor protection provision which specifies that options and convertible securities may be exercised relative to the lowest price at which securities were issued since the issuance of the option or convertible security. The full ratchet guarantee prevents dilution, since the proportionate ownership would stay the same as when the investment was initially made.⁵

Fully Diluted Earnings Per Share - Earnings per share expressed as if all outstanding convertible securities and warrants have been exercised.³

Fully Diluted Outstanding Shares - The number of shares representing total company ownership, including common shares and current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.³

Fund Size - The total amount of capital committed by the investors of a venture capital fund.³

Funding - This term is used synonymously with the words “financing” and “capital.” It refers to the amount of money that is needed for a business endeavor. For example, a new business owner may seek a certain amount of funding for their startup company. This “raised” capital can be used to launch their endeavor as well as to sustain their company until monetary profit can be generated.⁴

Funding Platform - Any online website used to facilitate investments in private companies. As a defined term, a specific type of platform defined by the JOBS Act of 2012 that will allow non-Accredited investors to invest in private offerings.⁷

Fundless Equity Sponsors - Fundless equity sponsors are sourcing and vetting deals without any committed capital, lining up financial sponsors on a deal-by-deal basis.⁹

FY - Fiscal Year

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