Business Angel A high net worth individual who is seeking companies in which to invest with a view to making a large capital return.

Business Model The road map giving an overview of the business proposition, how it will be achieved and sustained.

Business Model Canvas A tool used to visually represent a business model and its key components.

Business Plan A plan including financial projections and market information relating to a company. This will be one of the principal documents an investor will rely on in deciding whether to invest in a company.

Cap table Also known as a Capitalisation Table, this depicts the share ownership in a company, so the types of shares, who owns them, how many they own, and the value of those shares.

Chair (Chairman/Chairwoman) The director appointed by the board of directors to act as its chair. In practice, this is a position of great influence. They will be involved in determining the agenda for board meetings and ensuring the board operates in an efficient manner. In public companies, the chair is expected to be someone different from the Chief Executive/Managing Director, and this is widely mirrored in spinout companies.

Chief Executive (CEO), Managing Director (MD) These are terms for the director of the company who has day-to-day responsibility for company management.

Chief Financial Officer (CFO) or Finance Director (FD) Terms for the company director who has responsibility for financial management and reporting of the company, including the production of financial information required by investors such as management accounts and cash flow forecasts.

Company Secretary The individual who has various obligations relating to the duties of the company to file documents with Companies House. A private company does not necessarily need a company secretary.

Copyright An IP right which arises automatically. It does not protect ideas, only the means by which such ideas are expressed. Copyright may arise in and protect a whole range of works, including items such as publication papers, reports, notebooks, tables, databases, computer programs, source code and diagrams.

Designs IP rights protecting 3D objects or designs applied to them. Design rights arise automatically if the design is not commonplace within the design field in question. Designs can also be registered if the design is new, and has individual characteristics.

Design Rights Provide protection for the visual appearance of products. There are also registered rights which confer a monopoly, as well as unregistered rights which give lesser protection.

Drag Along Rights Rights available to shareholders holding a specified majority of the equity share capital, which require other shareholders to sell their shares whenever the majority sell their shares (provided the same terms are made available). These are also sometimes known as “come along” rights.

Due Diligence Detailed analysis and appraisal of a company’s background, its IP, its management and business plan.

D&O Directors and Officers, usually in reference to liabilities insurance.

ICURe Innovation to Commercialisation of University Research is an Innovate UK-funded programme that partners with early career university researchers with the aim of providing support, guidance, feedback and up to £30,000 in funding to help conduct market research and customer discovery.

Incubation Stage A phrase that can be used to describe the early phases of a startup or spinout’s life. Can also refer to the part of the startup process where a spinout’s principal activities are no longer appropriate for location in the research institution, and have to physically move to a dedicated startup support premises (called an incubator).

Intellectual Property A category of property that includes intangible creations of human intellect that comes in many forms. The best-known types are copyrights, patents, trademarks, and trade secrets.

Intellectual Property Rights, or IPR Rights given to legal entities over intellectual property they created or own. They typically offer the owner an exclusive right to the use of the creation for a certain period of time.

Invention Disclosure Form A confidential document specific to your university, submitted to the Tech Transfer Office describing a new invention, its advantages over existing tech and who the inventors are.

Investment Round Any time funding is raised from investors, of any type, its called a ‘round,’ and is often preceded by a drisptor indicating the stage the business is at, e.g. pre-seed, seed, A, B, C.

License Permission granted by the owner of intellectual property (IP) that allows another party (licensee) to act under some or all of the owner’s rights, usually via a written legal document (the license).

Memorandum of Association Sets out the intention of each of the first shareholders to form and take shares in a company.

Non-Disclosure Agreement (NDA) A legal agreement which protects the exchange of confidential information between two or more organisations. This is typically a bilateral agreement.

Non-Executive Director A director who has no role in the day-to-day operation of the company but usually attends board meetings and becomes involved in the strategy for the business as and when required. An investor will normally appoint at least one non-executive to the board, for which they usually receive a fee.

Observer Someone appointed by a third party, such as your institution or one of the investors, to act as the eyes and ears of the appointer. Depending on the company’s Articles of Association, they may or may not have the right to speak at board meetings. As they are not a director, they will not have the right to vote at board meetings.

Patents Registered rights protecting inventions for products or processes, within a specific country or region. Details of all UK patents (or applications for patents) are held by the UK Intellectual Property Office.

Pivot In the commercial world pivot means to change the business model, product or service in some way, normally off the back of learning some new information that demonstrates the current plan is not optimal.

Preference Shares A class of share to be paid which is entitled to a dividend of a fixed amount with priority over any other dividend. Such shares may also be redeemable, where the company will effectively buy them back at a fixed price over a period of time.

Proof of Concept (PoC) Principle (PoP) The activity which takes an idea (usually expressed in a development proposal format) to a state whereby the idea can be demonstrated in some way. An example might be a prototype that can generate sufficient data to show the idea has merit, meaning further funding to develop proper working proposals is justified. This is regularly called Proof of principle (PoP), although PoP customarily describes a slightly later stage. PoP and PoC are sometimes used interchangeably.

Pre-Money Valuation The negotiated value (usually determined during term sheet negotiation) of a company prior to any investment being made.

Post-Money Valuation The sum of the pre-money valuation and the money being invested.

Seed Funding Money sought to carry out and complete seed stage activities. The amount can range from modest sums up to approximately £1 million, depending upon the nature of the business and its underlying IP.

Seed Stage The stage at which a business idea is being translated into working proposals. In practice, this means the production of a business model and supporting plan, the development of a prototype, the initiation of relevant IP searches and registrations, and the initial market research activities to validate the business proposition.

Serviceable Addressable Market (SAM) The segment of the Total Addressable Market (TAM) within the geographic reach that can be targeted by a companies products/services.

Smart Money investment funding from Angels, Venture Capitalists and Corporate Venture Capitalists in reference to their relevant knowledge of the sector and the insights they provide.

Sneakout Only possible where the IP is purely knowhow based. The founders elect to start the company without the university taking an ownership stake. This needs to be done carefully to (a) avoid using IP you cannot rightfully make a claim to, and (b) to avoid damaging the relationship with the university.

Spinout An academic spinout is a company that meets condition 1 and at least one condition out of 2-4: The company was set up to exploit intellectual property developed by a recognised UK university or research institution. (This is broadly in line with the Higher Education Statistics Agency (HESA) definition of a spinoff). The institution owns IP that it has licensed to the company, and/or The institution owns shares in the company, and/or The institution has the right (via an options or warrants contract) to purchase shares in the company at a later date.

Stakeholders Individuals or organisations who are not shareholders but who are likely to be affected by the company’s activities and objectives. Stakeholders may include banks and other loan or credit providers, customers and debtors.

Total Addressable Market (TAM) The total market demand for a product and/or service.

Term Sheet A term sheet is a nonbinding agreement that shows the basic terms and conditions of an investment. The term sheet serves as a template and basis for more detailed, legally binding documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is drawn up.

Trademarks Any sign capable of being represented graphically. It may consist of words, designs, letters, numerals, colours or even smells or shapes. Trademarks exist in the UK as both registered and unregistered IP. Registration offers a cost-effective and easy way to protect brand images.