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What is the ratchet ?

It designates an anti-dilutive clause which gives an investor the possibility of protecting his investment from a drop in the valuation of the structure.

The ratchet clause allows an investor to subscribe to new shares which are then reserved for him and this during a capital increase so as not to reduce his percentage of participation.

This clause can also be exercised by the retrocession of shares in the company by the founders to investment funds at a symbolic price or the nominal value of the shares.

The ratchet clause is unfavorable to the founders of the structure.

What is fundraising ?

A fundraiser as its name suggests is an operation that allows a company to raise funds from investors for its structure by issuing shares.

What is Due Diligence ?

Due diligence is the in-depth examination of the financial, legal and operational information of a structure which aims to assess its solvency, its viability and its value as well as to identify the risks and opportunities associated with any transaction with it. this.

Due diligence allows an investor to engage in a transaction with the structure studied.

Due diligence is an essential element before engaging in a significant transaction negotiation because it ensures that the parties have a complete understanding of the company and its activities before engaging in it.

What is reverse dilution, or inverse antidilution?

Reverse dilution or reverse anti-dilution is an operation that protects the value of the shares of a structure in the event of a capital increase at a price lower than the reference price.

Reverse dilution can be done in different ways.

It can for example consist of:

1. Allocation of new shares to existing shareholders, allowing them to maintain their proportion of shares in the capital of the company.

2. The adjustment of the exercise price of stock options that allows shareholders to benefit from the increase in the value of the company.

What is the lock-up period ?

The lock-up period is a period of time during which the shareholders of a structure are required not to sell their shares.

The lock-up period is implemented during the initial public offering (IPO) of the structure in order to stabilize the share price and to protect investors against a rapid decline in the value of the share.

The lock-up period is used in the context of mergers and acquisitions, in order to ensure that the shareholders of the target company do not sell their shares before the transaction is finalized.

What are the series A, B, C, D, E?

In the context of financing startups and structures in the growth phase, series A, B, C, D, E refer to the different stages of fundraising.

Each round of financing is intended to meet the specific needs of a structure in terms of growth and development.

1. Series A is the first major funding round for a startup from institutional investors such as venture capital funds. Funds raised in Series A are used to develop the product or service, expand the team, fund research and development, and support initial business growth.

2. The B series is intended to support market expansion, customer base growth, new feature development, or geographic expansion.

3. The C series is used for the international development of the structure, to finance acquisitions, or to strengthen the position of the structure on the markets.

4. Series D is used for additional growth, strategic acquisitions or to prepare the company for a possible initial public offering (IPO).

5. The E series is reserved for structures that need additional capital after previous fundraisings. It is used to support continued growth, strategic acquisitions or to strengthen the company's position in the market before a possible exit, such as an IPO or acquisition.

What is the LPA or Limited Partner Agreement ?

An LPA or Limited Partner Agreement is an agreement between an investment fund and its limited investors who are investors who do not actively participate in the management of the fund and do not make strategic decisions regarding the investments of the investment fund.

The LPA defines the terms of the investment of the fund and the obligations and responsibilities of limited investors towards the fund.

It may include information on investment and management fees, profit distribution arrangements and conflict resolution mechanisms.

What is Fair Market Value ?

The Fair Market Value is the market value, i.e. the price at which a structure would be valued between a buyer and a seller with full knowledge of the facts and without pressure.

Fair Market Value is generally used as a baseline to set the value of a structure for investment or merger and acquisition purposes.

The Fair Market Value may be different from the valuation of the structure during the last round of investment.

What is the Full Ratchet clause?

The Full Ratchet clause allows the investor to claim the full value of his investment in the event of subsequent dilution of his shares.

The Full Ratchet is used to protect the interests of venture capitalists in the event of future dilution such as that which may occur when granting stock options to employees or when issuing new shares.

When it is applied, investors can subscribe to new shares to bring the average subscription price of their shares back to the price of the second round without taking into account the valuation of the first round.

Investors then benefit from a total adjustment of the subscription price according to the fall in valuation.

The Full Ratchet is considered a favorable clause for venture capitalists that gives them the right to claim the full value of their investment in the event of future dilution.

What are Carried Interest ?

Carried Interest allows investment funds to benefit from the sales performance of a company in which they have invested.

Carried Interest is materialized by shares that are reserved for investment funds.

The carried interest may only be paid if the investors have recovered their investments and the associated return.

What is the hurdle ?

The hurdle is a minimum annual rate of return for investors in an investment fund.

What is an Elevator pitch ?

An Elevator pitch is a brief and concise presentation intended to present a structural project in a manner.

What is the right of first refusal ?

The right of first refusal or Right of first refusal is often provided for in funding agreements.

The right of first refusal or Right of first refusal aims to protect their interests and guarantee them a minimum return on investment in the event of resale of the shares.

The right of first refusal or Right of first refusal can for example provide for a right of first refusal on the shares of the company which allows the shareholders to refuse the sale of the shares to a third party and to buy them themselves.

The right of first refusal or Right of first refusal can also provide a right of first refusal on the assets of the company which allows shareholders to oppose the sale of these assets to a third party and to buy them themselves.

What is Growth Equity or Capital Croissance ?

Growth Equity or Capital Croissance refers to financing that is used to support the growth and expansion of a structure that has already reached a certain maturity and needs capital to continue its expansion.

Growth Equity or Growth Capital makes it possible to support scale-ups in their development.

Qu'est-ce que le GP ou General Partner ?

Le GP ou General Partner fait référence à la personne ou à la structure qui gère un fonds de capital-risque ou un fonds de private equity.

Le GP ou General Partner est responsable de la gestion des actifs du fonds, de la prise de décision stratégique et de la recherche de nouvelles opportunités d’investissement.

Le GP ou General Partner est responsable de la gestion des relations avec les investisseurs du fonds et de la communication des performances du fonds aux investisseurs.

Le GP ou General Partner est rémunéré sur la base de frais de gestion et de performance du fonds et peut être également impliqué dans la gestion de l’entreprise dans laquelle le fonds a investi.

What is Post-money valuation or post-investment valuation ?

Post-money valuation or post-investment valuation is the value of a structure after it has received a capital investment.

It is used to assess the performance of the structure and thus determine the distribution of ownership between the structure and the investors.

To calculate the Post-money valuation it is necessary to take the Pre-money valuation which is none other than the value of the structure before the capital investment and then add the amount of the capital investment.

For example, if a company has a Pre-money valuation of 20 million euros and receives a capital investment of 10 million euros, its Post-money valuation is 25 million euros.

What is Pre-money valuation or pre-investment valuation ?

Pre-money valuation or pre-investment valuation is the value of a company before it receives a capital investment.

The Pre-money valuation or pre-investment valuation makes it possible to determine the distribution of the property between the structure, the investors as well as the amount of the capital investment.

To calculate the La Pre-money valuation or pre-investment valuation it is necessary to take into account the assets of the company, its income, its profits, its growth potential and its position in the market.

Pre-money valuation or pre-investment valuation can be determined by using valuation methods such as the net present value method or the book value method.

What is Pre-Seed funding ?

Pre-Seed funding is funding used during the seed phase which is intended for companies in an advanced phase of development before even having launched their product or service.

Pre-Seed funding can be used to fund initial business costs such as research and development, hiring staff and purchasing equipment.

Pre-Seed funding is often provided by individual investors or venture capital funds specializing in start-up companies.

It can be obtained in the form of a loan or capital financing.

What are pro-rata rights or proportional subscription rights ?

Pro-rata rights or proportional subscription rights are rights granted to shareholders of a structure that allow them to participate in a capital increase in proportion to their existing participation.

Pro-rata rights or proportional subscription rights allow shareholders to maintain their proportion of ownership in the structure when it issues new shares.

Pro-rata rights or proportional subscription rights give them the possibility of subscribing to new shares before they are put on the market, allowing them to maintain their financial weight and their voting power in the structure.

Pro-rata rights or proportional subscription rights are generally granted to shareholders in proportion to their existing stake and may be limited to a certain amount or to a certain percentage of the capital increase.

Pro-rata rights or proportional subscription rights may be included in the company's articles of association or be provided for in a partnership agreement.

What is the Seed Fund ?

A Seed Fund is an investment fund that helps start-up structures finance their development and launch their activity.

Seed investment funds invest in structures that are starting up or are at the stage of creating their product or service.

Seed investment funds allow structures to finance their research and development, to hire staff and to launch their product or service on the market.

What are repurchase options ?

Repurchase options or redemption options refer to options that allow a company to buy back its own shares from its shareholders.

Repurchase options or buyout options are often granted to shareholders of a start-up or growing company who are looking to raise funds from investors.

Repurchase options allow them to exit their investment by selling their shares to the structure rather than to other investors.

Repurchase options or repurchase options may be granted according to the terms set out in the financing agreement.

Repurchase options or buyout options may also include deadline conditions, which set the period during which the company can exercise its buyback option.

It is important to note that repurchase options or redemption options can have an impact on the valuation of the company and on the voting rights and obligations of shareholders.

Repurchase options or redemption options can also be seen as a constraint on the structure and can be challenged in the event of a dispute.

What is the revenue run rate?

The revenue run rate or revenue growth rate refers to the speed with which a structure generates revenue.

The revenue run rate or revenue growth rate is a key indicator of a company's financial performance and growth.

The revenue run rate or turnover growth rate makes it possible to measure the evolution of its revenues over a given period and to compare its performance with that of its competitors or with its own objectives.

The revenue run rate or revenue growth rate can be used as a foundation for establishing revenue forecasts and determining the company's development strategy.

The revenue run rate or turnover growth rate can also be used to assess the valuation of the company and to negotiate financing or partnership agreements.

What is the Runway or life expectancy ?

Runway or life expectancy is the length of time a business can operate without the need for additional funding.

Runway or life expectancy is calculated by dividing the company's available cash by its average monthly expenses.

The Runway or life expectancy is an important indicator for structures because it measures the length of time during which they can continue their activities without the need for new sources of financing.

The runway or life expectancy can be used to assess the long-term viability of the business and to plan future fundraising efforts.

In times of crisis, investors can ask their holdings to increase their runway.

What is the lead investor ?

The lead investor is the primary investor in the fundraising and may be involved in negotiating the terms of the investment and structuring the transaction.

The lead investor plays a role of mentor and adviser for the structure, he can also be involved in its strategic decision-making.

As the main investor, the lead investor has a significant influence on the direction taken by the structure and on the decisions made by its leaders.

The lead investor is not necessarily the largest investor in the structure.

The lead investor can be chosen for his expertise and his network of contacts rather than for the size of his investment.

What is the Unique Selling Proposition or Unique Value Proposition ?

The Unique Selling Proposition or Unique Value Proposition is a marketing technique that aims to identify and highlight the elements that make the difference in the product or service compared to those of the competition.

The Unique Selling Proposition or Unique Value Proposition is a key element of the marketing strategy because it allows you to differentiate yourself from your competitors and highlight what makes the offer unique.

The Unique Selling Proposition or Unique Value Proposition can be a unique benefit of the product or service, a guarantee, a promise, etc.

The objective is to find what will attract the attention of customers and encourage them to choose the target product over another.

What is vesting ?

When an employee receives shares of a structure in order to induce him to remain in it, these shares are often subject to vesting.

This means that the employee does not have the right to sell or transfer these shares before a minimum presence date in the structure's workforce.

Vesting is often used to encourage employees to stay with the organization and invest in its long-term success.

This helps to create a corporate culture within the structure.

What is the Rule of 40 ?

The Rule of 40 is a performance indicator used to assess the financial health of a structure in the start-up phase.

The purpose of the Rule of 40 is to measure a company's ability to generate profits while continuing to grow rapidly.

Companies that meet the Rule of 40 are considered financially sound and can help them attract investors and secure future funding.

What is the Wash out round ?

A wash out round is a financing step in the context of a fundraiser which aims to dilute the shares of existing shareholders in order to allow the entry of new investors.

When a structure seeks to raise funds, it does so by issuing new shares and selling them to investors.

If the company already has shareholders and issues new shares, this has the effect of diluting the value of their existing shares by reducing the proportion of the structure they own.

To avoid this, the company can choose to organize a washout round or cleaning round.

During a washout round, the structure offers existing shareholders the opportunity to buy back their shares at a predetermined price.

If a shareholder chooses to sell their shares, they leave the financing round and sell their share of the structure.

What is the capitalization table?

The capitalization table or capitalization table is a document that summarizes the capital structure of a company, including the different classes of shares issued and their percentage of ownership.

The capitalization table or table of capitalization indicates the voting rights associated with each class of shares and the total amount of capital invested in the company.

The capitalization table or capitalization table is used by structures to follow the evolution of their capital and to understand the distribution of ownership and voting rights between the different shareholders.

The capitalization table or capitalization table can be used to assess the valuation of the structure and to plan events such as share issues or redemptions.

What is the term sheet ?

A term sheet or letter of intent is a document that summarizes the main conditions and terms of an investment or financial transaction.

It is used in the context of the purchase or sale of a structure, investments in start-up capital, the granting of credits, the issuance of debts or any other important financial transactions.

A term sheet is not a final contract but a negotiation document that serves as the basis for drafting it.

What is the Non-disclosure Agreement (NDA) or confidentiality agreement ?

A Non-disclosure Agreement or confidentiality agreement is a contract by which a person or a company undertakes not to disclose confidential information to third parties.

A Non-disclosure Agreement or confidentiality agreement can be concluded between two structures, between a structure and an employee or between a structure and a third party.

A Non-disclosure Agreement or confidentiality agreement defines the information that must be protected and the conditions for disclosing this information.

A Non-disclosure Agreement or confidentiality agreement may include provisions on the duration of protection and on dispute resolution mechanisms in the event of breach of the agreement.

What is Non-equity Assistance?

A Non-equity Assistance fundraising round is a financing operation in which investors finance a structure without receiving shares in this company in exchange.

Investors may receive interest on their investment or a refund at a later date.

This type of financing comes into play when the company needs cash or encounters difficulties between two rounds of financing.

What is the option pool ?

The option pool is a group of stock options reserved for the employees of a company.

Stock options are rights granted to employees to purchase shares of the structure at a pre-determined price called the strike price which is set at a price below the market price.

The pool option is set up during the creation of the structure or during a fundraising.

It is managed by the board of directors or by a stock option management committee to determine the allocations.

The pool option is used as a tool for motivating and remunerating employees by offering them the possibility of participating in the growth of the structure and benefiting from the increase in the value of its shares.

The pool option can be used as a means of recruiting and retaining talent.

What is the over-allotment option ?

The over-allotment option or over-allotment option is an option granted to a main subscriber in the context of an initial public offering (IPO) or a public offer of sale (OPV).

The over-allotment option or over-allotment option makes it possible to request the purchase of more securities than those initially provided for in the offer in order to meet strong demand from investors.

The over-allotment option or over-allotment option is exercised within 30 days of the closing of the offer and can be used to increase the size of the offer up to 15% of all securities offered for sale.

The over-allotment option or over-allotment option is granted to the lead underwriter as an incentive to agree to take over the offering and to encourage investors to participate.

What is the Key man clause or Clause d'Homme Clé ?

The Key man clause or Key Man Clause is a clause in a contract or agreement which provides for special provisions in the event of the death or incapacity for work of a key person for the company.

The Key man clause is often used in loan contracts and venture capital financing agreements to protect the investor in the event of the loss of the key person for the company.

The key man clause may contain provisions such as termination of the contract or the obligation for the structure to repay the loan or return the funds of the investor.

The Key man clause may include provisions for replacing the key person, appointing a replacement or putting in place succession arrangements.

What is an Accredited Investor or approved investor ?

An Accredited Investor or approved investor is a person or structure who meets certain financial or professional conditions and who is authorized to invest in complex or high-risk financial products.

These products are often excluded from access by unlicensed investors due to their complex nature and potential for significant loss.

What is Common Stock ?

Common Stocks are ordinary shares of a structure that give shareholders the right to participate in general meetings of the structure and to vote on important decisions concerning it, such as the appointment of members of the board of directors, the statutory amendments and dividend distributions.

Common Stock shareholders are also entitled to receive a portion of the profits of the structure in the form of dividends.

These dividends are not guaranteed and depend on the financial performance of the structure.

Common stocks are generally considered longer-term investments because they give shareholders a stake in the future profits of the company.

Common Stocks can be bought and sold on stock exchanges.

What are participating preferred stock ?

Participating preferred stock or participating preferred stock is a type of stock that gives holders rights to participate in the profits of the company in addition to voting rights and preferential rights in the event of liquidation.

Participating preferred stocks or participating preferred stocks are often used in the context of fundraising and merger and acquisition transactions and are generally granted to investors who contribute significant capital to the structure.

Participating preferred stocks or participating preferred stocks are designed to encourage investors to participate in the growth of the company and benefit from its performance.

Participating preferred shares or participating preferred stock are remunerated at a fixed rate which may be higher than the rate of return for ordinary shares.

Participating preferred shares or participating preferred stock may also include rights of conversion into ordinary shares which allow holders to participate fully in the profits of the structure.

What is the build-up ?

A build-up is the process of developing or expanding a structure by buying or merging with other structures to increase its size and power.

This may include corporate acquisitions of assets, talent, technology,...

The build-up is used to accelerate the growth of a structure, to diversify its product portfolio or to acquire new markets.

The build-up is used to strengthen key skills, innovation capabilities, company distribution networks, ...

What is multiple burn ?

Multiple burn is an indicator that aims to assess the efficiency with which a structure develops.

What is dry powder ?

The dry powder is used to describe the capital reserve available to a venture capitalist.

The dry powder is gradually reduced as equity investments are made.

What is Clawback ?

Clawback is a clause that allows a structure to recover part or all of the compensation paid to an employee or manager in the event of poor performance, fraud, violation of company rules, ...

This clause can be included in employment contracts, bonus agreements, stock option agreements or any other type of remuneration.

Clawback is used to encourage employees and managers to act responsibly and follow company rules because they know that their compensation can be recovered in the event of a breach.

Clawback can help reduce incentives for fraud or mismanagement because employees and managers know they can be held accountable for their actions.

What is the Cliff?

A Cliff is a clause often included in employment contracts and bonus agreements which provides that the employee will not receive all of their compensation in the form of bonuses or stock options until they have reached a certain performance threshold or will not have worked for a certain period of time.

A Cliff of three years means that the employee will not receive their full bonus or stock options until they have worked for at least three years in the structure.

If the employee leaves the structure before having reached the required duration, he will not receive all of his remuneration in the form of bonuses or stock options.

Cliffs are used by structures to encourage employees to stay in them for a given period of time and to encourage them to perform.

What are Come Along Rights or participation rights?

Come Along Rights or participation rights are a clause provided in certain merger and acquisition contracts that give the acquirer the right to participate in the profits made by the target structure following the transaction.

This clause can be included in the sales contract when the acquirer pays part of the value of the target company based on its future performance.

Come Along Rights or participation rights are often used when the acquirer believes that the value of the target company is undervalued and wants to be sure to participate in the profits made by the target structure in the years following the transaction. .

This clause can be used to encourage the managers of the target company to stay in the structure and continue to work for it after the transaction.

What is a joint venture?

A joint venture is a commercial relationship in which two or more structures collaborate on a specific project or business activity.

In a joint venture each structure contributes resources, such as money, personnel and assets, and shares in the profits or losses of the structure.

Joint ventures are an effective way for structures to pool their resources and expertise to achieve a common goal or enter a new market.