Startup & Funding

Three different things, often confused

A proof of concept tests whether something is technically possible. A prototype shows how it would look and feel. An MVP is a real, working product released to actual users. They are not interchangeable.

The thing you are looking for

The point at which a product genuinely satisfies a strong market demand, usually visible through retention and organic growth rather than a single metric.

A deliberate change of direction

Changing a core part of the business model or product while keeping what has been learned. Not the same as giving up.

Evidence it is working

Demonstrable progress that investors and partners recognise: users, revenue, retention, signed contracts.

Months of cash left

How long the business can operate at the current spend before money runs out. The number that shapes most startup decisions.

How fast cash goes out

Net monthly cash outflow. Gross burn is total spend; net burn is spend minus income.

Self-funded

Growing on revenue and the founders' own money rather than outside investment. Keeps full control and full risk.

The earliest funding rounds

Pre-seed typically funds getting to a product; seed funds finding product-market fit.

Later funding rounds

Progressively larger rounds, each usually tied to a step change in scale: A to build a repeatable model, B to scale it, C to expand further.

An individual backer

A private individual investing their own money early, often bringing relevant experience alongside the cash.

Venture Capital

Firms investing other people's money into high-growth companies in exchange for equity, expecting most to fail and a few to return the fund.

The investor presentation

A short slide deck covering the problem, solution, market, traction, team and the ask. Usually ten to fifteen slides.

The outline of a deal

A short, mostly non-binding document setting out the key terms of an investment before full legal documents are drawn up.

The investigation before signing

The buyer's or investor's detailed examination of the business: finances, contracts, code, security, IP ownership and compliance.

What the business is deemed worth

Pre-money is the value before new investment; post-money is pre-money plus the amount invested. The difference determines what share the investor gets.

Capitalisation table

The register of who owns what share of the company, including options and convertibles.

Your slice getting smaller

When new shares are issued, existing shareholdings reduce as a percentage. A smaller share of a much larger company can still be the better outcome.

Investment now, shares later

Instruments that take investment without setting a valuation immediately; they convert to equity at a later priced round.

Seed / Enterprise Investment Scheme

UK government schemes giving investors substantial tax relief for backing qualifying early-stage companies. A major factor in how UK startups raise money.

Enterprise Management Incentive

The UK's tax-advantaged share option scheme for employees, widely used by startups to attract staff they could not otherwise afford.

Earning equity over time

Shares or options are earned gradually, typically over four years, with a one-year cliff before any vest at all.

Structured early-stage support

Programmes offering mentoring, space and often small investment. Accelerators are usually fixed-term cohorts ending in a demo day.

How investors get their money back

A sale of the company, an acquisition, or a public listing.