Navigating the fast-growth tech & SaaS sector can be a challenge, especially when faced with an ever-evolving array of jargon and terminology. To keep you ahead, we've launched a comprehensive glossary of the most pertinent terms for 2023. In this edition of The Journal, we're sharing a selection of these terms to help you understand the current industry landscape. Dive in to discover straightforward explanations of common fast-growth tech & SaaS terms.
An Investment Committee (IC) is a group of individuals within an organisation responsible for making investment decisions. The committee reviews and evaluates potential investment opportunities, conducts due diligence, and provides recommendations based on financial, strategic, and risk assessment considerations.
Liquidation preference determines the payout order in case of a corporate liquidation. It's often used in VC deals to favour investors, allowing them to recoup their investment before other shareholders.
Pre money valuation
Pre-money valuation is the value of a company before it goes public or receives external funding or financing. It's important for determining the equity that investors receive as a result of their investment.
Product-led growth (PLG) is a go-to-market strategy where the success and growth of a business are primarily driven by the value and quality of its product or service. In a PLG approach, the product itself becomes the primary driver for customer acquisition, retention, and expansion, leveraging user experience, product features, and viral loops to fuel growth. By prioritising product excellence and customer satisfaction, businesses aim to organically attract and retain customers, leading to sustainable growth and market success.
Reverse vesting is a mechanism that gradually transfers ownership of equity from a founder or employee back to the company over a specific period. It's often used to protect the company's interests in case of early departure or underperformance, ensuring that unvested equity is returned to the company.
A secondary refers to the buying and selling of existing investor positions in a privately held company. It involves the transfer of ownership of shares from one investor to another, typically before an exit event such as an IPO or acquisition.
Warranties are contractual assurances provided by the seller or business to the buyer or investor regarding the quality, performance, or condition of the products, services, or assets being sold. These warranties outline specific guarantees, such as the functionality of software, absence of defects, compliance with specifications, or protection against intellectual property infringement. Warranties aim to instil confidence in the buyer or investor by mitigating risks and providing recourse in case of non-compliance or issues with the purchased products or services.