Our glossary of entrepreneurship and commercialization terms allows you to find definitions for terms commonly used in the business, investment, and start-up communities.
Acquisition - when a firm buys another firm.
Angel - a high net-worth individual who invests his/her own money in an early-stage start-up. Often angel groups will invest together.
Biocompatibility - tests of new medications or medical devices to insure that they are compatible with biological tissue and will not produce a toxic or immunological response in the body.
Clinical Risk - the risk that the clinical trials may not show the intended benefits to the patients or may have significant side effects.
Clinical Trials - trials to evaluate the effectiveness and safety of a new medication or medical device. Usually these are divided into phases (1-4), beginning with animals and progressing through larger scale studies in humans.
Commercialization - bringing a new product, medical device, diagnostic, or pharmaceutical to the market.
Corporate Venture Capital (CVC) - investment funds provided by a larger company to a start-up; typically at a later stage in life of the start-up.
Due Diligence - a search for information to verify the technical, market or financial claims of a company; used in the context of an investor considering investing in a firm or in the context of a larger firm considering an acquisition.
Elevator Pitch (speech) - a short 60 to 90 second description of your business idea, usually including 1) the problem to be solved and who has the problem 2) briefly, how your solution is unique, and 3) a request for a follow-up meeting. The idea is that you have just gotten into an elevator with a busy investor and have the amount of time until they step off the elevator.
Entrepreneur - one who undertakes the risk of starting a new business. Often thought of as the business person who initiates the founding of the firm, but also the technical founder may be considered an entrepreneur as well.
Exit Strategy - how the firm plans to enable its investors to cash out their investments; can include an acquisition, initial public offering (IPO), or as dividends.
Initial Public Offering (IPO) - when shares of the company are sold to the public for the first time.
Intellectual Property (IP) - an intangible asset that consists of human ideas and knowledge, such as a process, design, material, product design, or artistic work. Examples are patents, trademarks, copyrights, and trade secrets.
Joint Venture (JV) - a separate legal entity formed by a contract between two parties (usually firms) to perform some economic activity such as product development jointly.
License - a legal contract that gives permission to perform a certain activity, such as selling a product. Often a license enables use of intellectual property.
Limited Liability Corporation (LLC) - similar to a corporation (C-corp or S-corp), an LLC protects its members from certain liabilities and lawsuits. It has specific tax implications and taxes are passed along to the individual owners of the LLC. Consult a legal professional for exact tax implications.
Market Risk - risk that comes from customers not wanting to buy a product, the market being smaller than originally estimated, or a competitor launching a competing product.
Patent - a government granted right to exclusively sell or produce a product (or use a process) for a designated period of time.
Seed Stage - the initial investment round in a start-up; typically less than $500,000 and sometimes as little as $10,000.
Series (A, B, C, or D) Round - stages of venture capital investment. In the life sciences, the earliest stage (Series A) typically occurs after there is some biocompatibility and animal data along with patents filed and possibly a peer-reviewed publication, though there is substantial variation.
Strategic Alliance - when two (or more) firms agree to collaborate to reach an objective through a common project. May include marketing, sales, or product development alliances.
Venture Syndicate - when multiple venture capital firms invest in a start-up together in a single round (or over the course of multiple rounds of investment).
Technical Risk - risk that a start-up will fail because the technology does not work or because the underlying science or biology is not understood well enough.
Technology Licensing Office (TLO) - an office that handles invention disclosures, patenting, licensing of technology, and commercialization; typically set up by universities and research/teaching hospitals.
Tech. Transfer - the transfer of technology (outside of the university or hospital) to a firm for commercialization and sales & marketing.
Term Sheet- a legal contract designating the terms and conditions under which an investor will provide funds to a start-up company; it also designates how future cash flows and control rights will be allocated under certain conditions.
Valuation - the total value given to a company. When investors consider providing funds to a start-up company, they will often negotiate a valuation for the company based on comparable companies or on how high of a multiple they believe they can eventually sell the company for one day.
Venture Capital firm (VC) - an investment firm consisting of general partners (GPs) that invest the money of its limited partners (LPs) in start-up firms. Once a fund is raised, it will often target a specific stage of investments (early or late, etc.) and specific industries (internet, life sciences, energy, etc.).
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