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1 Million Cups Des Moines: Venture Capital Edition

1 Million Cups Des Moines is a weekly networking and presentation event for entrepreneurs and their latest projects. The event, and the coffee, are free. 1 Million Cups Des Moines events are held most Wednesday mornings at 8a.m. at the Science Center of Iowa, which also graciously provides free parking in the Science Center Parking Ramp during the event (be sure to grab a ticket from Emily on your way into the Science Center). Networking starts at 8a.m., with the presentation usually starting between 8:30a.m. and 9a.m.

While 1 Million Cups Des Moines events are typically presentations by up and coming companies, this Wednesday’s event will be a presentation by the venture capital group NextLevel Ventures. NextLevel Ventures typically invests $1 to $4 million for a minority ownership position in a company with the potential to scale rapidly. Qualifying companies generally have at least $1 million in annual sales and a defined path to a large increase in revenue.

If you have not attended a 1 Million Cups event before, here is a brief startup and venture capital glossary of frequently used funding terms to help make your first 1 Million Cups experience be a little more enjoyable:

Accelerator: A program designed to take startups that have already gained some traction to a place suitable for the next investment round. Accelerator programs often range from three to six months.

Accredited Investor: An individual investor who meets certain Securities and Exchange Commission minimums for income and net worth. Certain investment opportunities are only available to individuals who meet the qualifications of an Accredited Investor.

Angel Investor: Accredited investors who invest their own assets in early stage companies, such as startups. Angel Investors generally invest in companies that are at a stage too early to obtain venture capital funding.

Benchmark: The performance metrics a company must meet to receive an additional round of funding from an investment group. Benchmarks may include things like sales and revenue goals, customer satisfaction metrics, and market penetration.

Bootstrapped: A company funded by its own revenue stream and/or its owner’s personal assets.

Deal Flow: The rate at which an investor or investment group locates new investment opportunities. A venture capital group may have to review hundreds of potential deals to find a deal worth pursuing.

Debt Financing: Raising money by borrowing money from a financial institution or investor, with the promise that the debt will be repaid with interest.

Down Round: Offering a new round of equity financing at a corporate valuation lower than the corporate valuation for the last round of funding. For a down round to occur something negative and unforeseen typically occurred between the two funding rounds. Down rounds can be a case of throwing good money after bad or an opportunity for investors to grab equity at a discount.

Due Diligence: A comprehensive analysis of a company’s business plan, financials, management team, etc. by someone with particular expertise in such evaluations to determine the present and/or future value of the company.

Equity Financing: Raising money by selling partial ownership in the company.

Friends and Family Round: A type of bootstrapping that extends to friends and family investing more in their belief in the startup founder than in the type of arms-length due diligence undertaken by angel investors and venture capitalists.

Incubator: A group that provides start-up companies with resources in exchange for partial ownership of the start-up. Resources provided by an incubator may include corporate management services, office space, office resources, internet access, etc. Unlike accelerators, incubators usually work to build companies on a longer timeline.

Initial public offering (IPO). Offering ownership shares in the company to the public for the first time.

Lead Investor: An individual or entity, such as a venture capital group, that puts together a funding round for a company. If the Lead Investor also puts the most money into the investment round, the Lead Investor is said to be “leading the round.”

Mezzanine Financing: A mix of debt financing and equity financing, such as options. Typically used by companies that are past the startup stage, but which have not yet gone public.

Round: Venture Capital firms typically invest money in companies in rounds. The first round is often the Seed round, with subsequent rounds referred to by letters, such as Series A, B, C, etc. rounds.

Seed round: The company’s first official financing round. Seed rounds are often used for building prototypes, proof of concept, and/or creation of a minimum viable product.

Secondary Public Offering: Offering the public new stock after an IPO. Secondary Public Offerings may occur in the event the founder wishes to exit and/or decrease participation in running the company.

Stage: The current state of a growing company’s financial/growth position. There are no hard-and-fast rules for determining which stage a company is at or even what stages there are. Some terms used to define company stages include: seed, early, mid, and late stages. Many Venture Capital firms have a particular expertise helping companies in only one or two stages of development and may not invest in companies outside of these stages.

Venture Capital: Assets provided by venture capital entities to smaller, higher-risk, startup companies with a clear path to accelerated growth.

Venture Capitalist: An individual or entity that invests venture capital in a new company. Venture capitalists often limit their investment to companies at a particular stage of growth and/or a particular market sector with which the venture capitalist has an established expertise.

If you choose to stop by 1 Million Cups Des Moines this Wednesday, be sure to introduce yourself to this 6’4″ patent attorney who will be making the rounds and enjoying a cup of coffee with you.

Brett Trout

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