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Samanth Shetty

Building Nestsureย โ€ขย 15d

10-Day Startup Series ๐Ÿ”ฅ 23rd June 2025 ๐Ÿงต Post 5๏ธโƒฃ : Terms Every Founder Must Know. There are alot of terms so we will divide the post, this will contain 5 terms and upcoming next 3 post will contain 5 terms each. It does not mean there are only 20 terms but these 20 will be the most important and most common terms which founder should know. So we will focus on these 20 for now, in future i might make a new post for each terms whichever comes into my head. ๐ŸŽฏMain terms are such as โ€œdilutionโ€, โ€œcap tableโ€, or โ€œvestingโ€ these are some of the main terms if you don't understand these terms and you are building a startup then you are building it blindly ( This is what top mentors say ). Let's begin with the essetnial startup terms which every founder must understand. ๐Ÿ“– Founder's Dictionary: 20 Must-Know Startup Terms ๐Ÿ’ฐ 1. Bootstrapping : This term is used when you build yoru startup using yoru own savings or revenue of the startup , without any external funding or investment is called Bootsrapping. ๐Ÿง  Zerodha, Zoho are example of bootstrapped comapnies. More info at : https://www.investopedia.com/terms/b/bootstrapping.asp ๐Ÿ“ˆ 2. Equity : It is reffered to the part of ownership in the starup, usually represented in percentage of shares. ๐Ÿง  Example : Elon Musk holds 12% of shares in TESLA and he is the only individual who holds the majority of shares. More info at : https://www.investopedia.com/terms/e/equity.asp ๐Ÿ“Š 3. Cap Table (Capitalization Table) : This is a table or chart which shows who owns what part in your company, includes everyone like founders, investors if ESOP's even employees are considered. ๐Ÿง  Mainly used when deciding how much % of shares will be diluted while raising funds. More info at : https://www.investopedia.com/terms/c/capitalization-table.asp ๐Ÿ’ธ 4. Dilution : This part is most important when you raise funds by issuing new shares, and the % of ownership you loose is called diluted share of yours.. ๐Ÿง  When you hold 100% and you get a new co-founder you issue him 30% of share and now you own about 70% of company and 30% of your ownership is diluted. It is said that Owning 100% of nothing is worse than 10% of unicorn and it is actually true and makes sense. More info at : https://www.investopedia.com/terms/d/dilution.asp ๐Ÿช™ 5. Valuation : There are types of valuation. Usually it is the worth of your startup based on the your traction, market and revenue and many more criteria usually it harder to value a startup than valuing a well built company. As well built company will have all kind of necessary information ready so its easier to just value them rather than valuing a new venture which does not have anything yet and they are at starting stage. ๐ŸซธKinds of few valuation and their source will be taged below. ๐Ÿ“ˆ Valuation https://www.investopedia.com/terms/v/valuation.asp ๐Ÿ“ˆ Start-up valuation https://www.investopedia.com/articles/financial-theory/11/valuing-startup-ventures.asp ๐Ÿช„ Pre-money valuation https://www.investopedia.com/terms/p/premoneyvaluation.asp ๐Ÿช„ Post-money https://www.investopedia.com/terms/p/postmoneyvaluation.asp Usually just focus on pre-money and post money valuation for now. ๐Ÿงฎ In a Simple way post-money valuation is just 0rs + investment procurred ( if startup has no traction and revenue ). If your company had revenue and traction then post-money valuation is basically pre-money valuation + investment. Drop comments below if y'all have any kind of doubts ๐Ÿ‘€, we will learn together and gain more knowledge. *This Post adhers to all community guidelines* *The image used below is sourced using Google images* * The content is based on personal knowledge, but have attached links for each term to let you guy's learn more about it, this post contains main source as Investopedia and all the links provided are property of Investopedia*

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