Debt To Equity Ratio

Debt to equity is a financial ratio used to assess the debt component and overall strength of a company’s balance sheet. Debt to equity ratio = (total liabilities / total equity)

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This glossary provides an overview of some key legal terms for startups. It's essential to consult with a legal professional to ensure a comprehensive understanding of these terms and their implications for your specific situation.

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Sale and Purchase Agreements

Sale and purchase agreements (SPAs) are legally binding contracts that detail conditions that must be met by the buyer and seller. They help to ensure a smooth purchase process and work to protect all parties.

Exit

An ‘exit’ is when a founder leaves a startup. For many founders, this is something they’ve planned for from day one, perhaps even hoping to build a unicorn company. They created the startup with the plan of cashing out at some point by selling ownership of the company either to investors or to another company.

Burn Rate

Burn rate is the rate at which a business spends money. It’s typically used by new businesses to track how much they spend in venture capital funding before creating their own positive cash flows. It is a measurement of negative monthly cash flow.