November 30, 1999 in Uncategorized

Acronym Soup: P

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Charlie Paparelli – President and founder of Paparelli Ventures, a pre-formation investment company focused on entrepreneurs in the Atlanta technology community.

Participating Preferred – A type of preferred stock that gives the holder the right to receive preferred dividends as well as an additional dividend based on some predetermined condition.  The additional dividend paid to preferred shareholders is commonly structured to be paid only if the amount of dividends that common shareholders receive exceeds a specified per-share amount.  

Pay-to-Play Provision – An investor must keep "paying" (participating pro-ratably in future financing) in order to keep "playing" (not have his preferred stock converted to common stock) in the company. 

PHP (Hypertext Preprocessor) – A widely-used general-purpose scripting language that is especially suited for Web development and can be embedded into HTML.

Preferred Stock – A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock.  Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.

Pre-Money Valuation – A term used in private equity or venture capital that refers to the valuation of a company or asset prior to an investment or financing.  External investors, such as venture capitalists and angel investors will use a pre-money valuation to determine how much equity to demand in return for their cash injection to an entrepreneur and his or her startup company. Pre- and post-money valuation concepts apply to each round of financing. 

Pro-rata – A method of assigning an amount to a fraction, according to its share of the whole.  For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share he or she owns.  Pro-rating also refers to the practice of applying interest rates to different time frames.  If the interest rate was 12% per annum, you could pro-rate this number to be 1% a month.

Protective Provisions -Veto rights that investors have on certain actions by the company.  The protective provisions are often hotly negotiated.  Entrepreneurs would like to see few or no protective provisions in their documents.  VC's, in contrast, would like to have some veto-level control over a subset of actions the company could take, especially when it impacts the VC's economic positions. 

Polaris VenturesPolaris invests in seed, early stage, and middle market companies in high growth industries. As the lead or co-lead investor, they take an active and long term role in helping management teams build highly successful business.  Polaris has over $3 billion under management and current investments in more than 90 companies. 

Post-Money Valuation – The value of the company after the investment has been made.  This value is equal to the sum of the pre-money valuation and the amount of new equity.  The implied post-money valuation is calculated as the dollar amount of investment divided by the equity stake gained in an investment.

Purewire – ATDC member company that secures business and social interactions on the Web.  Founded by veteran security industry entrepreneurs, the company offers Web security-as-a-service to increase ROI and lower the total cost of security for businesses. 

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