A facility, also known as a credit facility or debt facility, is a type of financing that is provided to startups to fund their operations. All debt or credit facilities come with a set of repayment terms which outline the principal amount, interest (or discount) amount and fixed payment schedule.
The financial statements of a company include its: balance sheet, income statement and cash flow statement. It’s used to convey the business activities and the financial performance of a company and is audited by government agencies, accountants, firms, etc. to ensure its accuracy for tax, financing, and investing purposes.
Fixed Interest Rate
Fixed interest rate loans come with a consistent interest rate over the term of the loan, unlike variable interest rate loans.
A flat round occurs when a startup raises a new round of funding at the same valuation as their previous round of funding. Unlike down rounds, flat rounds are neither good nor bad.
The float of an employee or investor’s stock is a dollar figure that represents the difference between the strike price of their shares or options and the current fair market value of said shares or options.
The greater the float, the better (or worse) the investment is—yes floats can be negative if the current strike price is lower than the strike price they initially paid.
Flow of Funds
The term ‘flow of funds’ describes the process of how money moves between lenders or other capital providers and the company receiving the funds.
Startups make predictions, or “forecast” their revenue, expenses and growth rate for the year using a variety of methods including: top-down, bottom-up and run-rate.
Forgivable loans are a form of debt that are “forgiven” or considered satisfied, after a period of time or a specified repayment milestone (often 80% of the loan value). They are typically provided by government organizations, such as the SBA.
Founders Shares (Founders Stock)
Founders shares, also known as founders equity or founder stock, refers to the equity that is allocated to the founders of an organization. In reality, there is no legal difference between founder’s stock and common stock, other than the “founder’s stock” may come with additional restrictions, voting rights, and other rights.
Free Cash Flow (FCF)
The free cash flow of a business is the leftover cash it generates after paying for its operating expenses and capital expenditures (CapEx). The more free cash flow a company has, the better it is positioned to pay down debt and grow, thus the more attractive it is to investors.
Friends and Family Round
As the name implies, in the friends and family round, your friends and family provide a capital injection into the business. It’s typically the first informal round of capital put into the business, preceding the pre-seed funding round.
Fully Diluted Shares
The term ‘fully diluted shares’ refer to the total number of common shares of a company that are outstanding and available to trade after all possible sources of conversion, such as convertible bonds and employee stock options, are exercised.
Full Drawn Advance
A fully drawn advance occurs when a borrower pulls their entire loan principal upfront and agrees to repay it plus the interest according to the amortization schedule and repayment terms.
A funding round includes any formal cash injection into a business by an investment fund or accredited investor. Funding rounds for most startups typically range from pre-seed to series e, but hypothetically can go on forever.