Investment bank

A firm that advises on and executes large financial transactions — mergers, acquisitions, IPOs and large debt or equity raises.

Example

A bank running the sale process for a company being acquired for $200M.

Important

Almost no early-stage startup ever needs one. If you are raising a seed round and someone offers to 'bank' it for a fee, be careful — that is not how early rounds work.

Related terms

• M&A (Mergers & Acquisitions) — One company buying or combining with another.
• IPO (Initial Public Offering) — Selling shares to the public for the first time and becoming a listed company.
• Venture capital (VC) — Professional investors who manage a fund of other people's money and invest it in high-growth startups in exchange for equity.

Lessons that explain it

• What investment banks actually do — Advanced, and mostly not relevant to you yet. What they are, and the one situation where a first-time founder might meet one. (10 min)
• How an acquisition actually runs — Approach, LOI, diligence, negotiation, close. The exclusivity clause is where founders lose their leverage. (12 min)
• What an IPO actually is — Advanced and far away. A financing event that turns your company into a public one, with everything that entails. (10 min)

All 176 terms in the Founder glossary