Venture Capital, Private Equity And M&a Glossary


venture capital glossary

Entrepreneur in Residence – An experienced entrepreneur who is employed by a venture capital firm and plays an advisory role. Due Diligence- An analysis made by an investor based on the facts and information about a company or product prior venture capital glossary to investment. ESG may be referred to as “ESG investments” or “Responsible investing.” Valuation is how much the company is worth as determined by several factors. Pre-money valuation refers to a company’s value before receiving funding.

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It usually consists of people, chosen by the company founders, whose experience, knowledge and influence can benefit the growth and direction of the business. The board will meet periodically but does not have any legal responsibilities in regard to the company. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an venture capital glossary issuer offering or an offering by a group that has purchased the issuer’s securities in the public markets. Financing for a company expecting to go public usually within 6 –12 months; usually so structured to be repaid from proceeds of a public offerings, or to establish floor price for public offer. Issue of shares of a company to the public by the company for the first time.

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Lead investor– The firm or individual that organises a round of financing, and usually contributes the largest amount of capital to the deal. Business angels– individuals who provide seed or start-up finance to entrepreneurs in return for equity. Angels usually contribute venture capital glossary a lot more than pure cash – they often have industry knowledge and contacts that they can pass on to entrepreneurs. Angels sometimes have non-executive directorships in the companies they invest in. Advisory board– An advisory board is common among smaller companies.

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venture capital glossary

For definitions on general business terms see our main glossary. The first large round of money raised after a seed round, usually once the startup has demonstrated real potential through product / market fit. The initial money needed to get a business off the ground, frequently provided by angel investors. Pre money is the value of the company before an investment is made and a post-money valuation is the pre-money valuation plus the value of the investment made. So if the company has a pre money valuation of £1m and receives £2m in funding, the post money valuation is £3m. Employee or founder equity options often have a so-called cliff, which means that they cannot be converted into shares for a set period of time.

It can either donate funds and support other organizations or provide the sole source of funding for their own charitable activities. Endowment An investment fund established by a foundation, university or cultural institution providing capital donations for specific needs or to further a company’s operating process. is calculated as an annualized effective compounded rate of return, using monthly cash flows to and from investors, together with the residual value as a terminal cash flow to investors. The IR is venture capital glossary therefore net, i.e. after deduction of all fees and carried interest. There is no assurance that a purchaser of a convertible note will realize a return on its investment or that it will not lose its entire investment. Additionally, purchasers will not become equity holders unless there is a future fundraising event, an IPO, or sale of the Company none of which can be guaranteed. Securities and Exchange Commission regulations, most startup investment opportunities are available only to accredited investors.

giving them the power to purchase additional shares in the corporation, or units in the LLC, in the event that the company authorizes the issuance venture capital glossary of additional shares or units. Preemptive rights allow equity holders to maintain their pro rata ownership positions in companies.

Glossary Of Investor Types

  • He also serves on the advisory boards of Digit, a disruptive financial technology company, Mark Burnett Productions, Springboard Fund and multiple startup and early stage companies throughout the world.
  • Cash invested by owners, developers, or other investors in a project.
  • Equity investments typically take the form of an owner’s share in the business, and return on equity involves a share in the profits.
  • Evidence of business equity is usually in the form of shares of stock.
  • As an innovator and serial entrepreneur, Sampson co-founded Multicast Media Networks ( in 2000 , a live and on-demand streaming platform that laid the foundation for companies like YouTube and Ustream.
  • Preferred shares in a private company are a class of stock that provides certain rights, privileges, and preferences to investors.

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While at Clifford Chance, she advised on capital markets transactions and corporate matters for companies throughout the world. Crowdwise is an online startup investing community focused on helping both investors and entrepreneurs navigate equity crowdfunding by providing courses, tools and educational content. Brian is the Founder of Crowdwise, LLC, and is an angel investor in 80+ private startups through equity crowdfunding. A young business venture, under about 5 years old, with innovation at the core of their product or service offering, and plans to rapidly scale. Their business model often aims to be disruptive to incumbent sectors. Startups often share cultural similarities in working practices, conventions and ambition.

venture capital glossary

Major shareholders may have their shares bought out, acting as a form of exit for founders and early shareholders, when they cash out their value gains for the first time. Digital marketing with some business development and product development thrown in. In early-stage startups people have to venture capital glossary wear many hats, and customer acquisition is key, leading to the emergence of growth hacking as a discipline. A startup ecosystem needs as many of these players as possible in the same physical or virtual space in order to thrive. Uncapped Notes- A funding practice designed to protect founders.