Back

10-Day Startup Series 🔥 23rd June 2025 🧵 Post 6️⃣ : This is the continuation of part of, "Terms Every Founders Must know". So here is the next 5 terms which is important to know, will be followed by two more post which will contain 5 terms each again. 📑 6. Term Sheet : It is basically a non-binding agreement from an investor outlining deal terms before proceeding with the final legal work. It is like just like a draft copy of an agreement to check if all the terms and agreement are accepted by both investors and founders. 🫠 A bad term sheet today can destroy your startup 2 years from now. I had spoken about this in earlier post you can check it out : https://medial.app/post/68543449ee3f93938b0c529f More info at : https://www.investopedia.com/terms/t/termsheet.asp ⏳ 7. Vesting : In simple terms vesting is employee's equity which are released over some time-period and not instantly, as it helps to retain the top-performing employee to work in the company. The vested equity is released gradually over some fixed time period. For example : Me as a founder, hiring a CEO and offering him 5% of equity after 1 year of work and later every year he work he get .5% of equity this is known as graded vesting.Type 2 - Me as a founder, hiring a CEO and offering him 20% of equity after 4 years of working, if he leaves my company before 4 years that 20% equity vesting will be null and void, this i called as cliff-vesting. More info at : https://www.investopedia.com/terms/v/vesting.asp 🧑‍💼 8. ESOP (Employee Stock Option Plan) : Everyone might have heard about this or some of you even would know about it. This is a kind of plan which allows employees to be a part of the company and own a chunk of it, often it is vested over time which also helps attracting the top-tier employee's and retain their talent. It can be in the form of equity which is known as shares/stocks too. More info at : https://www.investopedia.com/terms/e/esop.asp 💵 9. Burn Rate : This is eventually more used while in startup phase, as your company won't be generating any profit but it have to spend money for its operation usually that is called burn rate. Sometimes it can be for good, sometimes it can be for bad and sometimes it can also depend on situation. In simple term it is how fast your company is spending money monthly Example : Zepto spending ₹2500 Crore for doing nothing but for recieveing complaints. This is bad burn actually . More info at : https://www.investopedia.com/terms/b/burnrate.asp 💡 10. Runway : It is usually stated as how much more money is left in company bank and how long can your company run at the current burn rate withou any external funding. Its like how long can you survive with 500 if you are spending 50rs per hour. 🧮 You have 1L left in your company bank and you are spending 25k per month for the operations and your runaway will be 4 months. You have to start thinking about raising the capital at that stage. More info at : https://finmark.com/glossary/cash-runway/ If y'all have any kind of doubts, drop it in the comments and let us all engage and understand it more deeply. 😄 *This Post adhers to all community guidelines* *The image used below is sourced from Google images* * The content is based on personal knowledge and have attached links for each terms, the webpages attached are property of each webpage mentioned*