Growth Finance Common Terms Explained

Retention can be calculated in two primary methods; Net and Gross. At Element, we like to focus on Net Dollar Retention (NDR) rather than Gross Dollar Retention (GDR).

Cash burn is usually identified in two main ways: Net Burn and Gross Burn. Both of these are necessary measurements, but at Element, we focus on Net Burn.

Venture capital is a common element of the capital stack for early-stage businesses that need large amounts of money to get going.

Private equity investors buy partial or complete ownership stakes in mature businesses

Strategy investors will provide different equity and debt solutions to businesses that correlate to their own business and see an overlap in services, customers, and products.

Venture debt is a loan product offered by some banks and other lenders. These types of loans are for growing companies where there is more risk than a traditional bank loan would work.

Seed capital is provided by private investors – usually in exchange for an equity stake in the company or a share of the profits of a product.

Commercial banks give loans to businesses that have advanced to a mature stage in revenue, customers, product, and cash flow.

A business grant is money awarded to businesses undertaking innovation or have the prospect of growth, resulting in employment creation.

What a word! It sounds like it should be up there with death and taxes. Fear not. This is just the word to describe how…

What is an equity warrant? A warrant is the right to purchase or sell something at a specified price. In venture finance, the most common…

Also known as a “balloon payment” or “bullet repayment,” a bullet payment is a lump sum payment made for the entirety of the outstanding balance…

At its core, the multiple payoff approach is pretty straightforward compared to other loan repayment methods. The loan agreement will stipulate a multiple of the original loan amount that needs to be repaid by the end of the term.

What is a convertible note? The word note is a generic term for a debt security. A convertible note is a debt security that can…

Net Cash Burn = Opening Cash Balance – Closing Cash Balance Net cash burn (also known as net-negative cash flow) should always equal the amount…