Glossary

Articles of association: Documents setting out the regulations for a business’ operations and purpose.

Business angel: A high-net-worth individual who provides capital for a business at the start of the business life cycle when others may be unwilling to.

Business culture: This refers to the inherent attitudes and behaviours of a business and their employees. It is demonstrated in the way people interact with each other and the outside world, the values they hold, and the decisions they make.

Cap table: A table detailing the equity breakdown of all shareholders within a business through time, and the round in which they purchased the equity.

Clawback provisions: Under certain situations, such as poor performance and misconduct, a business may reclaim some or all of the bonuses and incentives awarded to the employee.

Commercialisation: The process of bringing new products, services and technologies to market for financial and societal gain.

Commercialisation Manager: A hybrid role at Ploughshare which serves to connect all aspects of business operations and maximise on potential opportunities.

Conflict of interest: A situation in which the aims or concerns of the spin-out and government department may be incompatible. The MOD and Dstl have each published conflicts of interest policies which founders can review with guidance from Ploughshare and their line manager to understand the implications for their role.

Dilution: The reduction in percentage ownership for a founder resulting from the sale of further shares to raise funds.

Dividend: A dividend is a distribution of profits by a company to its shareholders. When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders.

Due diligence: The process of appraising a business’ current state of affairs prior to making a deal.

Enterprise Investment Scheme (EIS): EIS is a tax efficient scheme designed to incentive investors to invest in risky enterprises by offering them tax relief.

Equity: The ownership of a business which is held by various parties in the form of shares.

ESG: Environmental, social and corporate governance.

Founder: Any party that takes founding equity in a spin-out.

Founding equity: Ordinary shares owned by the founding shareholders of a company.

Grants: Non-repayable funding given to a business for a specific purpose linked to public benefit.

Gross Value Added: An economic productivity measure which measures the gross contribution of a corporate entity to the economy.

Ideation: The process of developing and then sharing ideas with others; from the original idea through to implementation of the idea.

Impact Investing: Investing in companies whose products or services measurably benefit society or the environment. Impact investors usually keep track of these benefits and hold the company to account to deliver them.

Innovation: The creation of new inventions, ideas or devices.

Intellectual property (IP): This is intangible property, such as the creation of trademarks, patents, copyright and trade secrets.

Inventor: Any person who created IP and submits this for consideration.

IP licences: A type of contract which allows a business to use another’s IP rights in exchange for payment.

Key Performance Indicators: A measurable metric which quantifies the success of employees and business performance e.g. revenue, profit, customer satisfaction.

Know-how: Practical knowledge, skills or expertise.

Lean canvas: A methodology used in the start-up world to map a business idea into its key and most risky areas to aid in planning and adaptation as the business moves through the set-up process. It is a dynamic and easy to use tool.

Leaver terms: These provisions usually ensure that ‘good leavers’ — those who are leaving because of situations such as retirement, ill health, death, or unfair or constructive dismissal — are paid the market value for their shares. ‘Bad leavers’ — such as those who breach their contract of employment, are dismissed for gross misconduct, or leave within a certain defined period — often get simply the nominal value of the shares.

Market Pull: When products are produced in response to customer needs and demand.

Non-dilutive equity: This is a form of equity offering which will not see the percentage ownership of the company reduced should further shares be sold to raise funds.

Option pool: Shares set aside to give people the option to buy shares in the future at a predetermined, tax favourable price. The option pool can be used to incentivise existing employees and attract new hires.

Options: An option gives the holder (in many cases an employee) the right, but not the obligation, to purchase a given number of shares in the business for a set price at some time in the future.

Ordinary shares: These entitle the holder to a share in the equity along with access to dividends (if paid) but are paid last in the case of liquidation.

Patents: This property right grants the inventor exclusive rights to the patented process, design, or invention for a designated period in exchange for a comprehensive disclosure of the invention and payment to the Intellectual Property Office.

Private equity: A private source of capital from investors who seek to invest and acquire ownership in other businesses.

Rewards to Inventors (RTI) scheme: This scheme, administered by certain government departments, offers inventors early rewards in the form of royalties to both inventing staff and their supporting teams when inventions fulfil their commercial potential through sales of produce or services.

Royalties: Payments made by one party to another in exchange for ongoing use of that party’s assets.

SDGs: 17 Sustainable Development Goals brought forth by the United Nations with the goal of creating a better world by 2030.

Seed Enterprise Investment Scheme (SEIS): SEIS is a tax efficient scheme designed to incentive investors to invest in risky enterprises by offering them tax relief. The incentive is typically greater than for EIS but there is a maximum investment size which qualifies.

Seed stage: The first equity fundraising stage that will usually be the first money flowing into the business.

Shareholders’ agreement: A company document outlining the rights and obligations of any persons with an equity stake in the business. This is not generally made public.

Stakeholders: Any party with an interest in the performance of the business.

Syndicates: A group of investors who agree to operate as a unit and invest in the same projects.

Technology Push: When research and development drives the production of new products rather than the needs of the market.

Technology Readiness Level (TRL): A scale for estimating the maturity of a technology (the higher the TRL, the closer to a market-ready product).

Technology Transfer Pack: The set of key documents describing all the different forms of IP to be provided to the Licensee under the terms of the licence agreement.

Triple Bottom Line: An accounting framework that incorporates three dimensions: social, financial and economic. Unique selling point (USP): Any feature of an asset or business that distinguishes it from those similar to it.

Valley of Death: The time between a company setting up its operations and being able to operate sustainably without the need for constant funding inflows.

Vesting: To give or earn a right over a given period of time. Specifically in employee benefits the employee will receive their
benefits over a scheduled period of time based on staying in employment and performing well.