The term ‘EBITA’ refers to a company’s earnings before interest, taxes and amortization—it is used to determine the financial performance of a company, and to compare the performance of two companies in the same line of business. 


The term ‘encumbered’ refers to securities that are owned by one entity, but are also subject to a legal claim by another. When a company borrows from another, legal claims on the securities owned by the borrower can be taken as collateral by the lender in the event that the borrower defaults on its obligation. Encumbered assets are subject to restrictions on their use or sale, and in some cases, they cannot be sold until the outstanding debts belonging to the owner of the securities are paid back to the lender who holds the claim against them.


Equity, also known as startup equity, refers to the degree of ownership stake that investors, founders and employees have in the business. Typically, the equity that employees and founders earn is subject to a four year vesting period and a one year cliff.

Equity Dilution

Equity dilution is a decrease in the ownership percentage of a company held by individual shareholders, resulting from the issuance of new equity. This can happen when a startup fundraises or raises capital by issuing additional shares of stock.

Equity Financing

The term ‘equity financing’ refers to a funding arrangement where an investor provides capital to a startup in exchange for equity or stock in the company. Venture capitalists, angel investors, angel syndicates, private equity groups and more all invest in companies via equity financing.


The term ‘exclusivity’ refers to the provision in some term sheets that limits the seller’s ability to solicit an offer from or negotiate with a third party during a specified time period. It can also refer to the term in the contract that restricts one party from working with or selling to a competing party.


An exit, or liquidation event occurs when a startup goes public through an IPO, is acquired, or goes bankrupt. After such an event, the investors, founders and employees of said company have the opportunity to sell their shares and “cash out”.


An expense is any cost associated with running a business including: payroll, overhead, rent cost of goods sold…etc.