Returns Glossary
Browse 6 returns terms defined in plain English, from the cultural dictionary of computing.
6 Returns Terms
- Exit Multiple
- The multiple of revenue, EBITDA, or invested capital associated with an eventual sale or public-market outcome. Investors model exit multiples to estimate...
- Hold Period
- The length of time an investor expects to hold an investment before exit or liquidity. Hold periods matter because different capital sources tolerate different...
- Internal Rate of Return
- A financial metric estimating the annualized effective return of an investment based on the timing of cash outflows and inflows. Venture funds use IRR to judge...
- IRR
- Short for internal rate of return, a time-sensitive measure of investment performance. In venture, IRR matters because the timing of exits changes the...
- Power Law
- A distribution in which a small number of outcomes account for a disproportionately large share of the total. In venture, power-law dynamics explain why a few...
- Upside
- The potential positive outcome or gain if things go well, whether in valuation, revenue, market share, or personal compensation. Startup decisions constantly...
Related Topics
- Investing (3 terms in common)
- Finance (3 terms in common)
- Funds (1 terms in common)
- Portfolio Theory (1 terms in common)
- Investors (1 terms in common)
- Potential (1 terms in common)
- Valuation (1 terms in common)
- Venture Capital (1 terms in common)