Glossary

Debt Service Coverage Ratio

The debt service coverage ratio (DSCR) is a financial ratio that assesses a company’s ability to service its debt. If the company has sizable capital expenditures (CapEx), you can calculate DSCR after deducting capital expenses.
This glossary provides an overview of some key legal terms for startups. It's essential to consult with a legal professional to ensure a comprehensive understanding of these terms and their implications for your specific situation.

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Dilution
A reduction in the ownership percentage of a shareholder due to the issuance of new shares in the company. As new shares are issued, the proportion of the company each shareholder owns decreases, potentially affecting their control, influence, and value of their investment.
Term Sheet
A non-binding document outlining the key terms and conditions of a proposed investment, used as a basis for negotiation between investors and a company.
Weighted Average
A weighted average assigns importance to values before calculating their average. This importance is represented mathematically by multiplying each value by its own predetermined "weight" number.

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