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Glossary Of Investment Terms

venture capital glossary

As used in investment term sheets, any investor who puts in more than a defined amount into a given round, and is therefore entitled to specific information and/or voting rights. A period of time during which certain shareholders are not allowed to sell their stock. A specific classification of worker that is not an employee of the company. A program or shared office center designed to support the successful development of companies venture capital glossary by offering cost effective resources and support. A corporation is divided into shares, which represent a slice of both the company itself and the value the company creates. These shares, once distributed, represent the company ownership . The process of investigation whereby both an investor and an entrepreneur have the opportunity to analyze and assess each other for the potential of an investment opportunity and partnership.

A tax designed to prevent wealthy investors from using tax shelters to avoid income tax. The calculation of the AMT takes into account tax preference items. A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets. The process of gaining control, possession or ownership venture capital glossary of a private portfolio company by an operating company or conglomerate. the speed ramp that takes startups from adolescence to something resembling early adulthood. Accelerator programs typically last three to six months and are meant to help startups that are already performing scale up and create the organizational framework that they’ll need to thrive.

venture capital glossary

When you make so much money at a startup exit that you can do whatever you want. When you can say FU to anyone or any offer and it doesn’t matter. Very early startup investment raised from people in the founders’ personal network. When an investor venture capital glossary buys a small amount of a big name startup, usually in a later round or at high valuation in order to have recognisable names in their portfolio and attract new opportunities. The day-in, day-out work that is unrelated to a particular project.

Chapter 11 of the bankruptcy code deals with reorganization, which allows the debtor to remain in business and negotiate for a restructuring of debt. Loan, typically from a commercial bank, that is backed by asset collateral, often belonging to the entrepreneurial firm or the entrepreneur.

The Startup Glossary: Bootstrapping And Fundraising

B2B technology is also sometimes referred to as enterprise technology. It may use a significant amount of borrowed capital to meet the cost of acquisition. Family office An entity that provides services to one or more affluent families, including investment management and other services (accounting, tax, financial and legal advice etc.). differs from impact investing, where the main investment goal is increasing social benefits, rather than generating a financial return. This site is operated by SeedInvest Technology, LLC (“SeedInvest”), which is not a registered broker-dealer.

Deal Flow- The rate at which investment opportunities are introduced to a funding institution. Capped Notes- This refers to the practice during investment rounds where a cap is placed venture capital glossary on a company’s valuation. Capitalization Table- A table displaying the total amount of securities issued by a company, along with details of the ownership of these securities.

Invest In Venture Capital With A Self

venture capital glossary

By accessing this site and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy. Convertible Note A form of debt that may convert into equity at some point in the future. If someone’s building a Startup or ramping up on the Investment and business world, chances are they are always out of time. Here we collate a Startup Vocabulary, Venture Capital Glossary, and Business Jargon to get you up to speed about the ecosystem.

Limited Partner

The equity or ownership interest created in a startup by its founders as a result of their contributions in the form of hard work and toil. An investment approach leaning venture capital glossary heavily on the identity of other well-known people who are supporting the company. An entrepreneur who has previously founded and run one or more ventures.

Sara received her law degree from Oxford University and is a member of the New York and DC bars and a Solicitor of the Supreme Court of England and Wales. She serves as co-Chair of the SEC’s Advisory Council on Small and Emerging Companies. She holds a Series 65 securities license as a registered investment advisor. Sara is an aunt, Army wife, skier, cyclist, gardener and animal lover. Previously, Devin served as the CFO of the third largest company on the 2009 Inc. 500 list. After completing a degree in finance at the University of Utah, he earned an MBA from Cornell University. Brian’s vision for Brainsy is that it will spawn 100,000 social media micro-networks – each using their own incentive system and currency to reward their community of contributors.

Note that this term does not automatically mean successful businesses; serial entrepreneurs may have a history of failed or not-quite-successful businesses. How long a startup can survive before it goes broke; that is, the amount of cash in the bank divided by the burn rate. The amount of money or net benefit generated by an investment or spend. Companies that are freely traded on the public stock exchanges such as NASDAQ and the New York Stock Exchange. A type of equity ownership of a company that has both a fixed value and priority in liquidation sequence. The value of a company immediately prior to receiving an investment, used to determine what percentage of a company’s ownership will be purchased in exchange for a specified investment amount.

  • As with private equity in general, VC investments often take years to bear fruit.
  • A number of investors offering funds together as a group on a particular deal.
  • A venture capital fund is a pooled investment vehicle that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.
  • Often, those funds with “vintage years” at the top of the market will have lower than average returns because portfolio company valuations were high, e.g. an Internet Fund started in vintage year 1998.
  • Within the last few years, syndication among angel investors has become more common, enabling them to fund larger deals closer to those typifying a small venture capital fund.
  • A lead investor often coordinates such deals and represents the group’s members.

Secondary Purchase- The act of purchasing stock from a shareholder rather than from the company itself. Pro-Rata- Division of stocks or equity based on equal proportions. Pre-Sales- A product for which customers have dedicated money and made purchases before the product has actually venture capital glossary been shipped. Sometimes, pre-sales take place before products have been produced or finalized. Pre-Money Valuation- The value of a company, determined before an investment has been made. Post-Money Valuation- The value of a company, determined after an investment has been made.


A startup company is a company in the early stages of operations. Startups are usually seeking to solve a problem of fill a need, but there is no hard-and-fast rule for what makes a startup. Liquidation preference gives a preferred shareholder priority in line for distribution of the company’s assets in the event the company has a liquidation event. Likewise, when there are several classes of preferred shareholders, the highest class of preferred shareholder will be given priority over the lower classes. A typical term sheet will therefore include the percentage of the company’s ESOP in the company’s valuation for purposes of determining the share purchase price and will also provide the vesting schedule. to ensure that the company is responsibly maintaining its capital without giving away too much. This describes a business that is targeting another business with its product or services.

Secondary Funds

wherein management decisions are made jointly amongst the members of the LLC, similar to a general partnership. The other form of LLCs is a manager-managed LLC, wherein an appointed manager who may or may not be an owner of the company, makes management decisions on behalf of the company. wherein management decisions are made by an appointed manager who may or may not be an owner of the company. The other form of LLCs is a member-managed LLC, wherein the management decisions are made jointly amongst the members, similar to a general partnership.

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