The Ultimate Glossary of Terms for Dealmakers

Another way to prevent getting this page in the future is to use Privacy Pass. Discover more opportunities and drive more prospect engagement. Level up your deal team with the most accurate data set available. A roll-up is a horizontal acquisition that’s consolidated into a larger company. Proprietary advantage is any competitive advantage that’s gained by using technology, data, or processes that are unique to and owned by the firm. A financial intermediary is a middleman that acts as the point of contact between two parties during a financial transaction. A financial accelerator is a type of program that aims to stimulate small changes in the economy through the actions of financial markets. Financing made available to an existing business, which has experienced financial distress, with a view to re-establishing prosperity. VCs that quickly swoop in on struggling startups, hoping to reverse their fortunes . A minimum viable product is the most basic version of a product that is usually developed in the garage of the founder’s parental home, utilizing a minimal amount of resources.

A defined share of equity (usually around 10%) set aside in the cap table to incentivise future employees. A high-net worth individual investing in a personal capacity, likely to be your first source of external funding after friends and family (if you’re lucky to have rich — and possibly foolish — enough friends). The site may also contain links to affiliate websites, and we receive an affiliate commission for any purchases made by you on the affiliate website using such links. Risk management is also done to evaluate the ROI by keeping the forecasted risks alongside.

Securities number

A narrow-based ratchet uses only common stock outstanding in the denominator of the formula for determining the new weighed average price. Broad-Based Weighted Average RatchetA type of anti-dilution mechanism. A broad-based ratchet uses all common stock outstanding on a fully diluted basis in the denominator of the formula for determining the new weighed average price. Compare Narrow-Based Weighted Average ratchet and Chapter 2.9.4.d.ii of the Encyclopedia. Alternative AssetsThis term describes non-traditional asset classes. They include private equity, venture capital, hedge funds and real estate. Alternative assets are generally more risky than traditional assets, but they should, in theory, generate higher returns for investors. A financial system is a set of institutions, such as banks, insurance companies, and stock exchanges, that permit the exchange of funds. Financial systems exist on firm, regional, and global levels. Borrowers, lenders, and investors exchange current funds to finance projects, either for consumption or productive investments, and to pursue a return on their financial assets.

• An incubator is an organization that provides start-up companies with free or low-cost office space, resources, mentoring, and introductions to potential customers, vendors, strategic partners and investors.
• The process of gaining control, possession or ownership of a private portfolio company by an operating company or conglomerate.
• The risk is high in startups because nearly two-thirds of startups backed by VC fail, it’s also invested in products with a high potential to scale but they might be not profitable at the moment or in emerging technologies.

In some cases, usually rare, the Investor means that his or her percentage ownership will always remain the same as when the initial investment was made. On the other hand, if Paul Allen buys his Microsoft stock at a price of $.75 per share then Bill Gates has experienced both Percentage Dilution and an Economic Dilution from his initial $1.00 purchase price. Psychometric evaluation is a scientific test that organizations administer to assess a person’s personality attributes and cognitive capabilities. Psychometric evaluation test helps recruiters determine if an individual is suitable for a job opportunity based on two parameters, i.e., ability and personality. It determines whether the candidate possesses the skills, attitude and behavioral tendencies needed to perform efficiently and effectively on the job.

Deal Flow

The year over year growth rate applied to an investment or other aspect of a firm using a base amount. Blue Sky LawsA common term that refers to laws passed by various states to protect the public against securities fraud. The term originated when a judge ruled that a stock had as much value as a patch of blue sky. Balance SheetA condensed financial statement showing the nature and amount of a company’s assets, liabilities, and capital on a given date. Accrued InterestThe interest due on preferred stock or a bond since the last interest payment was made. To be taken seriously as a dealmaker in today’s highly competitive market, it’s critical to be able to talk the talk. Understanding and adopting the vocabulary used across all major financial sectors can be a bit overwhelming at first, but with the help of this dealmaking glossary, you’ll be up to speed in no time. A tuck-in acquisition occurs when a platform company absorbs a smaller business with highly valuable niche product functionality rather than building it from scratch. Performance targets are generally expressed as a combination of the company’s and operating unit’s shared goals. They can be relative or absolute and are usually expressed in terms of progression.

DividendThe payments designated by the Board of Directors to be distributed pro-rata among the shares outstanding. Dividends can be paid either in cash or in kind, i.e. additional shares of stock. Cumulative – Missed dividend payments that continue to accrue. Non-cumulative – Missed dividend payments that do not accrue. Non-participating – Dividends which do not share with common stock. Convertible SecurityA bond, debenture or preferred stock that is exchangeable for another type of security at a pre-stated price.

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Unicorns are private companies that have announced funding rounds with post-money valuations over $1 Billion. While we believe these reports to be reliable, we have not independently verified their accuracy. All figures in this presentation are as of January 15, 2021. We undertake no obligation to provide updates or revisions. Please contact us for details of AngelList Advisors or SAX Capital’s valuation policy. In other words, participating preferred gets the original capital back and the share of ownership. This term is sometimes referred to as investors double dipping as investors are getting the capital and the ownership verses just the percentage of the capital. This is done to prevent a flood of stock being traded on the market soon after the IPO which could increase stock price volatility and could drive the price down. Read more about where to buy hive crypto here. An exit strategy is a strategy to exit an investment, usually resulting from a sale of a company or an initial public offering.

The market penetration rate refers to a measure of the volume of products sold relative to the total estimated target market, expressed as a percentage. Series A is the first big funding round for startups that have a product and evidence of traction. The Series A round is typically funded by VCs who seek to obtain equity. Thanks to an investment from an angel investor, Fly Buy was able to finalize their drone product and fine-tune their subscription-based business model. Opposite of equity financing, debt financing is where businesses raise capital by securing a loan from a financial institution. Pre-money valuation is how much your company is worth prior to funding, and post-money valuation is the value of the company plus the funding. A limited partnership is created when two types of partners — general and limited partners — go into business together.

«venture capital» в деловом английском

Common startup KPIs include customer conversion rates, organic traffic, and the number of active users. Customers in your target market will share similar characteristics, such as demographics, geolocation, income, and lifestyles. Define a problem that you’re aiming to solve, and determine how your product or service will solve that problem. Non-solicitation — an agreement often signed by employees and management that prohibits such persons, once they have left the company, from soliciting the customers and employees of the company. Dilution — see Economic dilution, Price-based dilution and Dilution of ownership. If a company cannot pay a cumulative dividend when it is due, it is still responsible for paying it in the future.

For example, an investor may allocate its investment program among public equities, bonds, alternative assets and cash. The allocation is based upon the investor’s return expectations, risk profile, liquidity needs, investment time horizon and other factors. Total Value to Paid In The ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date. As defined in the current GIPS Standards (/standards/current/Pages/index.aspx), any recallable distributions should be included in the numerator of this ratio. Any reinvested capital should be included in the denominator.
Navigating through the details of an RFP alone can be challenging, so use TechRepublic Premium’s Software Procurement Policy to establish … A demonstration of the feasibility of a concept or idea that a startup is based on. Many VCs require proof of concept if you wish to pitch to them. An agreement between two parties to protect sensitive or confidential information, such as trade secrets, from being shared with outside parties. A reference to the beginning of a venture, or the earliest point of a startup. Generally considered an advantage to invest at this level. Contractually defined limitations on an individual’s ability to sell or transfer their shares in the company.

Value stocks High yield stocks

Rights offerings are particularly common to closed-end funds, which cannot otherwise issue additional ordinary shares. The sale of a security directly to a limited number of investors. Avoids the need for S.E.C. registration if the securities are purchased for investment as opposed to being resold. The size of the issue is not limited, but its sale is limited to a maximum of thirty-five non-accredited investors. Preemptive RightA shareholder’s right to acquire an amount of shares in a future offering at current prices per share paid by new investors, whereby his/her percentage ownership remains the same as before the offering. Net IRRThe dollar-weighted internal rate of return, net of management fees and carried interest generated by an investment in the fund. The return considers the daily timing of all cash flows and cumulative fair stated value, as of the end of the reported period. Net Asset Value NAV is calculated by adding the value of all of the investments in the fund and dividing by the number of shares of the fund that are outstanding. NAV calculations are required for all mutual funds (or open-end funds) and closed-end funds. The price per share of a closed-end fund will trade at either a premium or a discount to the NAV of that fund, based on market demand.

A blind pool is a type of investment fund where the specific investments to be made by the fund are not known at the start of the fund. Private equity funds are blind pools because even though the general strategy is known at the time the fund is raised, the particular investments the fund will make aren’t known at that time. Managers of blind pools have discretion to make the future investments, so long as the investments are within the stated investment parameters. Voluntary RedemptionThe right of a company to repurchase some or all of an investors’ outstanding shares at a stated price at a given time in the future. The purchase price is usually the Issue Price, increased by Cumulative Dividends. Small Business Administration Provides loans to small business investment companies that supply venture capital and financing to small businesses.

An obligation to make or take delivery of a specified quantity of an underlying asset at a particular time in the future and at a price agreed upon when the contract was made. Exchange-traded futures contracts have standard terms, and are subject to daily margining. In the investment fund business, a fraction of a fund unit. Under this system, the fund assets are valued on the basis of the previous day’s closing prices. A transaction in which two parties agree to the purchase and sale of a commodity or asset at some future time under such https://www.beaxy.com/exchange/eth-usd/ conditions as the two agree. Together with money market instruments, bonds are referred to as fixed-income securities because they make regular, fixed-interest payments and repay the principal amount in full at maturity. When an investor exposes assets to the influence of uncertain variable , the assets are exposed to these factors. To clarify who receives the dividend on a share that is sold around the time the dividend is due, a date is fixed when a share goes ex-dividend. Anyone buying after this date will not receive the dividend.

It provides a comprehensive overview of the registrant’s business. The report must be filed within 90 days after the end of the company’s fiscal year. Follow-on Investment periodThe period defined in the LPA whereby a fund can complete follow-on investments in underlying holdings. Follow-on FinancingA supplementary round of financing in an existing Portfolio Company that builds on its original financing, generally in line with business growth and development. Venture-backed firms are often engaged in multiple follow-on deals.

Through bootstrapping and crowdfunding, Fly Buy was able to raise $400,000 in capital. After figuring out their operation costs and burn rate, they estimated that they have a runway of around 18 months. To maintain positive cash flow while finalizing their drone product, the founders decided to go for a seed funding round. Earlier this year, I made my first visit to the heart of the venture capital industry, Sand Hill Road in Menlo Park, California. I sat in a lot of meetings with venture capitalists who were talking about things like leading a round of funding, seed-stage venture, LPs and exits. Let’s just say we had to stop for the occasional definition.
Quartile returns identifies the returns of comparable funds , ranks these returns from top to bottom, and groups the returns into four buckets by performance. Also known as «NAV,» this is calculated as the sum of all of the fund’s assets less all liabilities. If the fund is publicly-traded, this amount is divided by the fund’s outstanding shares to obtain a NAV per share. «Market Capitalization» or «Market Cap» is the market value of a publicly-traded company obtained by multiplying the company’s earnings per share by the number of outstanding shares. Note that there are variations of market cap, such as fully-diluted market cap, which includes the impact of outstanding options and warrants. Asset-based lending is a type of lending that is secured by assets of the borrowing company. The security gives the lender priority in claims to other creditors if the company defaults or goes bankrupt.

Your Initial Public Offering turns your private venture into one listed on a stock exchange, where shares can be publicly traded by anyone. This step entails greater market scrutiny as well as regulatory obligations. Once the terms are accepted and the deal is finalised, the venture capitalist becomes a part of the company and takes up certain roles and duties. The firm also uses its contacts, partnerships, and experience to help the company grow. However, contrary to the usual belief, VCs don’t usually fund companies that have just started. As a matter of fact, less than 1% of companies receive venture capital. Moreover, raising venture capital is a lengthy and stressful process and involves a lot of examinations from the investors’ side.

Some firms, however, manage multiple funds geared toward different stage companies. The first time shares of stock in a company are offered on a securities exchange or to the general public. At this point, a private company turns into a public company . This is when a company borrows money with the intent that the debt accrued will later be converted to equity in the company at a later valuation. This allows companies to delay valuation while raising funding in it’s early stages.

The initial document that outlines the goals of the parties involved in a deal and is drafted to open negotiations under clauses dictating exclusivity and secrecy. The distribution of profits or responsibilities for the repayment of loans to ensure a minimum amount of taxes are paid to preserve deal value when structuring a deal that involves several companies. The basic elements of a deal spelled out more specifically in a share purchase agreement. A fund that never closes and keeps fundraising to ensure consistent cash flows. The vetting, analyzing and assessing of individuals, companies and investors before engaging in a transaction. The process of raising small amounts of capital from many people to fund a venture. When a corporation purchases another company for strategic purposes.