EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the measure of operating profitability calculated by adding those items back to net income. It's used widely in valuation (EBITDA multiples for mature companies and PE transactions), debt analysis (debt-to-EBITDA ratios), and cross-company benchmarking, because it removes effects of capital structure and tax jurisdiction. EBITDA is most relevant at later-stage and physical-asset-heavy businesses, and less relevant at early-stage SaaS where contribution margin and unit economics matter more. It is the most-discussed financial metric at mature companies.
The calculation:
Method 1: Net Income + Interest + Taxes + Depreciation + Amortization
Method 2: Operating I...
Vesting is the schedule on which a person earns the right to keep granted equity. Unearned shares or options are forfeited and returned to the company if the recipient leaves before the schedule is complete. It applies to founders, employees, advisors, and (rarely) board members, and exists to make sure equity rewards people who stay and contribute over multiple years rather than people who took a grant and left.
The standard startup vesting schedule is four years with a one-year cliff: nothing vests for the first 12 months, then 25% vests on the cliff date, and the remaining 75% vests in equal monthly increments over the next 36 months (1/48th of total per month). The cliff is binary: leave on day 364 and you walk away with zero; l...
Corporate bylaws are the internal operating rules of a corporation. They govern how the company makes decisions, holds meetings, elects directors and officers, conducts shareholder votes, and handles routine corporate actions. The document is adopted at incorporation (typically at the initial organizational meeting of the board), and amendable by board or shareholder action depending on the bylaws themselves. Unlike articles of incorporation, which are filed publicly with the state, bylaws are an internal document kept in the corporate records, addressing offices, shareholder and board meetings, officer roles, stock issuance, indemnification, and amendment procedures.
The major sections of a typical set of corporate bylaws: offices a...
A patent is a government-granted intellectual property right giving the inventor exclusive rights to make, use, sell, and license an invention for a limited period. The term is typically 20 years from filing for utility patents, in exchange for publicly disclosing how the invention works in sufficient detail that someone skilled in the field could reproduce it. Patents are issued by the US Patent and Trademark Office (USPTO) at the federal level and have no state-level equivalent.
The three patent types:
An advisor is an outside expert who provides part-time strategic guidance, introductions, or domain expertise to a startup in exchange for equity. The relationship is formalized in a short advisor agreement and distinct from board members (advisors have no fiduciary duty and no voting power), from investors (advisors are not buying equity), and from consultants (advisors are ongoing relationships paid in equity, not project work paid in cash). The role is the most common way founders extend their leadership reach in the first three to four years of a company.
The categories that matter: technical advisors (a senior engineer or domain expert who reviews architecture decisions or vouches for the founders to investors, typically 1 to 4...
An accredited investor is an individual or entity meeting SEC thresholds for income, net worth, or professional knowledge to participate in unregistered private securities offerings. For individuals: $200,000+ in annual income (or $300,000 with spouse) for the past 2 years with reasonable expectation of continuing, OR net worth exceeding $1 million excluding primary residence, OR specific professional certifications like Series 7, 65, or 82 added under the 2020 SEC rule expansion. The qualification covers most startup financings under Regulation D Rule 506(b) and 506(c). It is the SEC's regulatory gate that determines who can legally participate in [Startup Investment] through private securities, and one of the most-impo...
A liquidation waterfall is the calculation that determines how exit proceeds are distributed across preference stack, share classes, and option pools at exit. Exit proceeds include acquisition cash, public offering proceeds, and dissolution distributions. The waterfall is modeled as a series of "buckets" that fill in priority order until the proceeds are exhausted. It is the math that determines what each shareholder actually receives, and the analysis founders most consistently postpone until it's too late to change.
The waterfall fills in roughly this order: secured debt first (rare for venture-backed startups, but present if there's outstanding venture debt with collateral), then unsecured debt and trade obligations...
A compensation philosophy is the explicit framework a company uses to make pay decisions across hiring, performance, promotions, and ongoing compensation adjustments. It defines how the company positions itself in the market (top of market vs median vs below market), how cash and equity balance in total compensation, how geography is treated (single global pay scale vs location-adjusted), and how performance vs tenure influences pay over time. The philosophy is one of the most-impactful documents a company creates because it shapes who gets attracted, who stays, and how employees experience the company over time. It is a discipline that most early-stage startups skip and most growth-stage companies eventually have to...
A startup accelerator is a fixed-term, cohort-based program that provides funding, mentorship, and a structured curriculum in exchange for equity, ending in a demo day. It is designed to compress a startup's first 6 to 12 months of development into a focused 3-month sprint, providing access to a network of investors and a culminating demo day where the cohort pitches.
The model was created by Y Combinator (founded by Paul Graham in 2005), which set the template most other accelerators have copied. The standard structure is a 3-month program, a small investment (Y Combinator currently invests $500,000 on standard SAFE terms in exchange for 7 percent of the company), weekly office hours with partners, group dinners, and a ...
Strategic planning is the systematic process of defining a company's long-term direction, choices, resource allocation, and execution priorities. It's typically conducted at multiple cadences (annual for long-term direction, quarterly for tactical execution, ad-hoc for major decisions), with the discipline varying significantly by company stage. Early-stage startups do minimal formal planning (founders adjust strategy frequently based on market feedback), growth-stage requires more deliberate processes (cross-functional alignment matters more), and mature companies have institutionalized planning processes (annual strategy refreshes, quarterly OKR cycles, monthly business reviews). It is the meta-process that organizes al...