Crowdinvesting Glossary

In this glossary you will find explanations of terms for many terms that are typically used by crowd investors.

ARR (Annual Recurring Revenue)
ARR refers to the annual recurring revenue and is mainly used in subscription business models where the customer pays a monthly or annual fee. Similar to the ARR, there is the related term MRR (Monthly Recurring Revenue), i.e. the monthly recurring revenue. 12x MRR thus gives the ARR.

Convertible (German: convertible loan)
A convertible loan is a loan that investors grant a startup today, which under certain conditions will be converted into shares/company shares at a later date.

MRR (Monthly Recurring Revenue)
MRR refers to the monthly recurring revenue and is mainly used in subscription business models where the customer pays a monthly or annual fee. Similar to the MRR, there is the related term ARR (Annual Recurring Revenue), i.e. the annually recurring revenue. 12x MRR thus gives the ARR.

Post money & pre money (company valuation)
The post-money company valuation is the valuation after (hence post) the newly collected capital was added to the company valuation. So if a company with 3MM Pre-Money (before raising the new capital) and then collects 1MM capital, then the post-money valuation is 4MM (3+1).

Unicorns (German: unicorn)
A (former) startup that has reached a company valuation of at least €1 billion (1bn)/ $/ £. Ultimately the dream of every crowd investor. Depending on when you entered the startup, your own investment is often worth 10x/ 100x as much as it was at the time of investment (based on an original valuation of 10MM/ 100MM).

convertible loan (English: Convertible)
A convertible loan is a loan that investors grant a startup today, which under certain conditions will be converted into shares/company shares at a later date.

Pay to play round of financing
An extreme form of "downround" (financing round with a lower rating than last): The development of the startup is significantly slower and worse than planned and new capital is urgently needed. Finally, an opportunistic investor dictates a significantly lower valuation for the new financing, supplemented by additional conditions: all old investors are either forced to invest fresh capital or their previous shares in the startup become effectively worthless.