VC terminology is confusing.

In an effort to make it more accessible.

Here are 9 VC investment terms all aspiring angel investors should know:

1. Term sheet:
A document issued by investors to founders indicating an interest in making an investment in their business. They contain all the major details of a proposed investment, but are non-binding, meaning neither party is required to follow through on the proposed terms.

Generally, the term sheet kicks off a broader due diligence process that concludes with a legal investment agreement.

2. Common shares:
A class of startup equity typically granted to founders and employees.

3. Preferred shares:
A form of startup equity granted to investors of the business that typically comes with additional rights and protections beyond what’s provided by
common shares.

4. Bridge round:
Interim funding rounds between larger funding rounds. Startups may raise a bridge round if they’re facing financial difficulty, although this is not always the case.

5. Capital call:
The process by which a fund manager asks the fund’s investors to contribute a portion of their fund commitment (i.e., the capital they’ve agreed to invest). Capital calls are necessary because a fund’s LPs don’t often have to contribute all their capital upfront.

6. Simple agreement for future equity (SAFE):
A form of financing that allows investors to convert their investment into equity at a future-priced funding round or liquidation event. SAFEs were invented by Y Combinator as a way to streamline early-stage financing deals.

7. Convertible note:
A form of debt financing that allows investors to convert their loan into equity in the event of a priced financing round or liquidation event.

8. Uncapped note:
A convertible note without a valuation cap (the maximum price at which the security will convert to equity). Startups issue uncapped notes when they’re raising financing without a formal valuation.

9. Pro rata rights:
An investment term that provides the investor the right, but not the obligation, to participate in a future financing round of the business. Pro rata rights allow investors to maintain their equity stake as the business expands.

10. Dilution:
A phenomenon in which existing investors of a business see their equity stake decrease when the startup goes out to raise a new round of financing. Dilution occurs because the business needs to issue additional shares to attract new investment.

AI TUTORIAL

Craft sales emails using ChatGPT

Want to craft high-converting sales emails and turn pain points into powerful purchasing invitations?

Try this prompt on Midjourney:

Write a sales email for [product or service] which is the perfect solution for [pain point] that our target audience is facing. It offers [benefit 1], [benefit 2] , and [benefit 3] that makes it a must-have for [target audience X] and add a CTA to influence people to buy

Here’s the result:

Tool used: ChatGPT

ENTERTAINMENT

Say a little prayer for Aretha Franklin’s sons

Dimitrios Kambouris/Getty Images

The children of the Queen of Soul are duking it out in court to see who will take control of the late singer’s multimillion-dollar estate.

Aretha Franklin did not leave behind a formal, typed-out will, but two handwritten versions were discovered in her home after she died in 2018. Yesterday, a trial began in Michigan where lawyers for two of the singer’s four sons will argue that a 2014 handwritten note—signed with a smiley face and stuffed in a sofa—counts as her last will and testament. Another son favors a different notarized document from 2010.

• Both documents split Franklin’s royalties among her children and require the three competing brothers to support her fourth son, who has a disability.

• But the wills differ on who gets her personal property and who takes charge of the estate.

Kecalf Franklin and Edward Franklin are vying for the 2014 document, which names Kecalf as executor and leaves him with his mother’s house, cars, jewelry, and the fur coats she’d famously let slide off her shoulders onstage. Franklin’s third son, Ted White II, favors the 2010 will that names him as executor and bars Kecalf and Edward from their inheritances until they get business degrees or certificates.—ML

GRAB BAG

Key performance indicators

Twitter

Stat: Twitter traffic dropped off in mid-2023 shortly after Elon Musk paid $44 billion for the platform, and dipped even lower this month amid unpopular changes—that’s according to Cloudflare’s CEO, who went viral this weekend for posting his company’s data on…Twitter. If you missed the tweet, it’s probably because you were over on Threads with everyone else, seeing what your favorite potato chip brand had to say. Meta’s Twitter clone hit 100 million users just five days after its launch, taking the crown for the fastest-growing platform ever from ChatGPT. Similarweb’s data shows Twitter’s traffic down 5% for the two days after the wide release of Threads, per CNBC. But Threads still has a ways to go to catch Twitter, which has ~250 million users arguing with one another.

Quote: “For the wellbeing of gorilla troop, please refrain from showing them any videos or photos as some content can be upsetting and affect their relationships and behaviour within their family.”

The Toronto Zoo is asking visitors to please stop showing content from their phones to its gorillas. The zoo is particularly worried about teenage Nassir, who, just like a human whose parents are desperate to get them to touch grass, would do nothing all day but stare at a screen if allowed. Behavioral husbandry supervisor Hollie Ross told Canadian news outlets that Nassir should be “able to just hang out with his brother and be a gorilla” rather than tracking which #getreadywithme vids are trending.

Read: Move over, Dubai. This tiny emirate wants to be the next haven for billionaires. (Bloomberg)

NEWS

What else is brewing

• Northwestern fired football coach Pat Fitzgerald, saying he failed to stop widespread hazing in the program.

• Vladimir Putin met with Wagner boss Yevgeny Prigozhin after Prigozhin briefly turned his mercenary soldiers against Russia, the Kremlin said, making Prigozhin’s status following the mutiny even less clear.

• The New York Times is scrapping its sports desk and will instead rely on coverage from The Athletic, a website the paper bought for $550 million last year.

• Larry Nassar, the sports doctor convicted of sexually abusing gymnasts, including Olympic medalists, was stabbed in prison, the Associated Press reports.

• A flight from Houston to Amsterdam had to be diverted to Chicago after a passenger became unruly, reportedly because his first choice of meal was not available.

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