Definition

An individual who is knowledgeable about investing and meets certain net worth and income tests as determined by the SEC's Regulation D. A requirement for certain limited partnership investments.

A larger company purchases another company with cash or stock as payment. This is a common exit strategy for start-up companies and the time at which the investors are repaid their initial investment and a return on that investment.

An entrepreneur who helps other entrepreneurs financially, and often plays an active role in the company's operations, such as occupying a seat on the board of directors.

A company in which another company has a minority interest. In general, a company that is related to another company in some way.

A high net-worth private individual who invests first rounds of funding in early, high risk private equity transactions and creating the opportunity for the investor to influence the outcome of the investment.

Yearly statement of financial condition for a company. It includes balance sheet and income statement items. It may also include a descriptive summation of the organization's highlights.

Agreement insuring that an investor's fractional ownership in a company will not drop in the event that the company issues more stock.

Acquisition accounting adjustments required by Accounting Principles Board (APB) Opinion No. 16. These adjustments are for financial reporting (and not tax) purposes.

Same as charter. A document, filed with a U. S. state by a corporation's founders, describing the purpose, place of business, and other details of a corporation.

The value of the assets owned by a company. Net asset value is the value of the assets minus the value of any liabilities.

A company's financial statements that have been prepared and certified by a certified public accountant.

A quantitative summary of a company's financial condition at a specific point in time, including assets, liabilities and net worth. Also called a statement of condition.

An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks.

CII - an organization of large public, Taft-Hartley and corporate pension funds formed to address investment issues that affect the size or security of plan assets.

A Congressional act designed to restore financial stability to the country during the Great Depression, through the creation of federal deposit insurance and the separation of commercial banking and investment banking through the Glass-Steagall Act.

Factors influencing the ability to get into a business including economies of scale, product differentiation, capital requirements, cost disadvantages independent of size, access to distribution channels, and government policy.

A less formal alternative to a board of directors, most commonly used by small companies. A company's advisory board usually consists of 3 to 7 members, and meets periodically but doesn't have legal responsibility for operations.

Individuals elected by a corporation's shareholders or appointed by the management of a a private company to oversee the management of a corporation. The members are paid in cash and/or stock (public companies), meet several times each year, and assume legal responsibility for corporate activities. Also called a directorate.

Financing the early stages of a business through a combination of friends and family borrowing, credit card debt, small commercial loans and reinvesting any revenue generated by the business for slowly expanding the business.

Indicates a credit relationship.

The level of sales necessary for a company to cover all its fixed and variable costs.

A short or medium term investment designed to finance a company until it can tap the public equity markets or other financing sources. Secondarily, Capital utilized by companies that intend to go public or sell in the near future.

For a fee or a percentage of the money invested, this individual may act as an agent in finding investment capital for small companies. Unlike other industries, there are no qualification standards or licensing requirements or screening for this role.

Rate (usually on a per month basis) at which a company is expending its cash. Useful in determining the timing of subsequent financings.

An individual who invests capital in small businesses, and who will often be actively involved in helping the business grow.

A document prepared by a company's management, detailing the past, present, and future of the company, usually designed to attract capital investment. This blueprint includes information on the management structure, qualifications and functioning; an evaluation of the market for the business and how to obtain the projected share of the market; the income and valuation of the business and the projected growth of that investment; and set milestones for evaluating the progress of the business' development.

A right to re-purchase previously issued stock, usually at a price which will show a good return to the investor

Preferred stock with generally weak terms and only marginally superior to common stock. Often used in start-ups to distinguish VC's equity from that of the entrepreneurs.

Requiring a large amount of assets to finance a given amount of sales.

The sum of a corporation's long-term debt, stock and retained earnings. May also be called invested capital. The market-price of an entire company, calculated by multiplying the number of shares outstanding by the price per share.

Refers to all the common and preferred shares, if any, for a corporation.

Share of profits or common stock ownership (beyond pro-rata investment) granted to a venture fund or promoter for its/his role in originating and structuring an investment.

A measure of a company's financial health. Cash receipts less cash disbursements over a period of time. Cash flow projections help managers plan how much cash will be required to keep a company operating.

A summary of a company's cash flow over a given period of time.

An individual who has resigned from a company taking the realized profit on stock and options.

Common stock that is created at a low cost per share so that management can afford to purchase their ownership position and so that institutional investors can receive a current return and a liquidation preference on most of their money by putting the bulk of their investment dollars in mezzanine securities.

The executive who is responsible for financial planning and record-keeping for a company; generally responsible for long term financing, dividend policy, capital investments, cash flow management and resource allocation.

The executive who directs an organization in matters pertaining to the investment decisions and monitoring. Often confused with the Chief Information Officer.

The executive who directs an organization in matters pertaining to technology.

Free of debt.

Is the underlying security, mortgage or asset for the purposes of securitization or borrowing and lending activities that is pledged or held in trust.

Is the shareholders equity stake in a corporation. Sometimes there are different classes of stock that may have greater or lesser voting rights than the ordinary common shares.

A company's common stock divided by its total capitalization, expressed as a percentage.

The effect of adding the interest or return on an investment to the principal such that interest is earned on interest. The reverse of discounting.

Stock held by an "affiliate" of the Company, regardless of the manner in which it was acquired. An "affiliate" is defined as a person or entity which directly or indirectly controls or is controlled by the issuer. There is no firm rule as to what ownership percentage makes one an "affiliate", but 10% is often used as a rule of thumb.

Is the action of transforming a security into another security.

The exclusive right to make and dispose of copies of a literary, musical or artistic work. May also be employed to protect software.

Assets of a company, such as cash, inventory and accounts receivables, which can readily be converted into cash.

A subsidiary of a large corporation that makes venture capital investments.

The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. Characterized by the limited liability of its owners, the issuance of shares of transferable stock, and existence as a going concern.

The total money, time and resources associated with a purchase or activity.

The opportunity cost of an investment. The rate of return that a company would otherwise be able to earn at the same risk level as the investment that has been selected.

The rate of return required by a company's common stockholders.

Refer to properties or items which are expected to be paid or sold within a year. It is a broad list but may be categorized as cash, cash equivalents, securitized liquid investments, accounts receivable, inventories and securities maturing within a year.

Refers to obligations due and payable within a year.

The ratio of current assets over current liabilities. A measure of a company's ability to pay its bills.

Return on an investment that is received currently as interest or dividends as opposed to the capital gain portion received upon exiting an investment. May be stated on a pre-tax equivalent basis by adjusting for the dividend-received deduction or other tax benefits.

A proposal for financing a business creation or expansion. Any contract or arrangement.

The number of investment opportunities or "deals" which an investor receives each year.

Unsecured debt backed only by the integrity of the borrower, not by collateral, and documented by an agreement called an indenture.

Refers to a relationship that obligates a borrower to pay interest and principal. The terms are often in writing and define the relationship. Indentures and mortgage notes are common types of these written documents.

The interest and mandatory principal payments that a company is obligated to make.

The change in earnings per share or book value per share that would result if all warrants and stock options were exercised and all convertible securities were converted.

A reduction in each current shareholder's fractional ownership resulting from the issuance of additional shares of common stock and/or the conversion of convertible securities. Decrease in the percentage of ownership of a company as stock is distributed to additional providers of capital in a corporation.

An offering in which IPO shares of stock are sold directly to investors rather than through an underwriter.

The release of relevant information.

The interest rate used in present value calculations to "discount" or convert future cash flows into terms of present dollars.

A deduction allowed a corporate shareholder for dividends received from a domestic corporation. The deduction usually is 80% of the dividends received but is currently 100% for an SBIC.

A highly dilutive equity round of financing usually arising from a company's poor performance.

The process of investigation, performed by investors, into the details of a potential investment, as an examination of operations and management and the verification of material facts.

Earnings Before Interest and Tax. A measure of operating performance that ignores the company's financial structure. EBIT equals profit before deducting interest and taxes. Also called operating income.

Earnings Before Interest, Tax, Depreciation and Amoritization. Refers to revenue generated before having to account for interest, taxes, depreciation and amoritization.

Mechanism or test by which the purchase price and/or timing of payments to a seller are dependent on the post-investment performance of the company.

The ratio of EBIT over interest expense. A measure of a company's ability to fulfill its interest obligations.

The ratio of total market value (equity plus long-term debt) over EBIT. Occasionally stated on an after-tax EBIT basis.

Concise but dynamic oral introduction to a company to catch the attention of investors. This comes from that moment when an entrepreneur traps an investor on the elevator and delivers his or her sixty second pitch on why they should invest.

The use of electronic means, principally the Internet, to bring sellers of goods and services in direct contact or one-on-one interaction with the consumer or purchaser.

An individual who starts his/her own business, assuming the risk for the sake of the profit.

Ownership interest in a company or corporation that is represented by the shares of common stock or preferred stock held by the investors.

Capital raised from owners.

Equity participation features that accompany debt securities. May take the form of warrants, convertibility features, or common stock.

It is similar to a profit sharing plan, but only the stock of the employer is purchased with the contributions.

The multiple of earnings, EBIT, cash flow or book value used to estimate the future value of company at the end of the investment period.

The method by which an investor will realize an investment.

A plan by which an investor closes out a specific position, usually by converting it to cash.

Capital to fund the development of an established business. A typical investment usually carries fewer risks and a lower potential return than a start-up investment.

Estimation of the value of an investment, including the change in price and any payment or dividends, calculated from a probability distribution curve of all possible rates of return, also called expected value.

A firm engaged in the business of financing accounts receivable, called factoring.

The selling of a company's accounts receivable, at a discount, to a factor, who then assumes the credit risk of the account debtors and receives casjk as the debtors settle their accounts. Also called accounts receivable financing.

In seeking management or technical assistance from outside resource providers, the amount charged for specific tasks provided that is negotiated based on the size of the business, the amount of time required to fulfill the requests, or the length of time the relationship may exist.

The combined debt, equity and financial instruments used to finance a company.

Providing the necessary capital.

The first investment in a company made by external investors.

Companies that have realized initial growth of their products or services. The management and operations are in place and markets identified are being penetrated using available resources.

Refer to items such as buildings, furniture, memberships and long-term leases. Typically, such properties are not intended for sale or disposal within a year.

An obligation to disclose all the facts relevant to a business transaction, as required by the SEC.

Proportionate ownership assuming the exercise of all common stock options, warrants, and the conversion of any convertible securities.

Having no cash or cash equivalents in one's portfolio.

Study of the balance sheet, earnings history, management, product lines and other elements of a company in an attempt to discern reasonable expectations for the price of a stock.

The repurchasing of some or all of a company's outstanding stock by employees or a private investor; opposite of going public.

Performing an initial public offering; opposite of going private.

Funding for a nonprofit organization, usually for a specific project. Also, give a right to.

Letting the investment community know a company is seeking capital.

A stock that has risen dramatically in price in a short period of time. A company that provides an unexpectedly high rate of return on investment at the time of a liquidity event.

The return on investment (ROI) necessary to compensate the investor for the risks involved in the particular investment. Investments offering ROIs less than the target rate are rejected or renegotiated.

An accounting of sales, expenditures, and net profit for a given period.

The money generated by a business.

Violation of another's right.

Initial Public Offering. The initial offer and sale of a company's stock to the public by means of a registration statement filed with the SEC pursuant to the Securities Act of 1933, as amended

Entity with large amounts to invest, such as pension funds, insurance companies, foundations or other heavily endowed organizations.

Something of value that cannot be physically touched such as brand, franchise, trademarks, patents or copyrights. Refers to items such as goodwill or intellectual properties.

Are assets such as copyrights, trademarks, and patents. Logos or special colors may also be intellectual properties. Any intangible asset that consists of human knowledge and ideas.

The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate.

The discount rate that equates the present value of cash outflows with the present value of cash inflows.

Also referred to as e-commerce utilizing electronic means, principally the Internet, to bring sellers of goods and services in direct contact or one-on-one interaction with the consumer or purchaser.

An item of value purchased for income or capital appreciation.

An individual or institution which acts as an underwriter or agent for corporations and municipalities issuing securities, but which does not accept deposits or make loans.

The factors utilized in deciding whether to invest in a particular business. Generally the factors or criteria fall within five general categories: 1) management 2) market 3) income/valuation/return 4) industry sector; and 5) stage of company.

1941 congressional law requiring all investment advisers to register with the SEC, designed to protect investors from fraud and misrepresentation.

Venture capital from angel investors.

An agreement between firms to work together on a project for mutual benefit.

Another name for common stock, called junior because it ie subordinate to preferred stock.

Securities with claims and/or rights that are subordinated to the senior creditors, particularly in liquidation.

A right, warrant or other feature added to a debt obligation to make it more desirable to potential investors.

Often the first to commit to investing in a company. The investor who represents the investors when more than one investor or investment firm is involved in a deal, often continues to represent the group by monitoring the company during the term of the investment.

A document issued by a bank which guarantees the payment of a customer's drafts for a specified period and up to a specified amount.

A business organization with one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who do not participate in day-to-day operations and are liable only to the extent of their investments.

Leveraged Buyout. The purchase of a business using the debt capacity of the business to borrow funds (sometimes by issuing notes to the seller) to finance the purchase.

A measure of financial risk. Defined in a variety of ways: debt-to-equity, debt-to-capitalization, etc.

To convert to cash. Also, to sell all of a company's assets, pay outstanding debts, and distribute the remainder to shareholders, and go out of business.

The ability of an asset to be converted into cash quickly and without any price discount.

The action by which a company withdraws cash from a business and investors seek repayment. Most commonly an initial public offering, an acquisition, a merger, a reverse merger or dissolving the business.

The priority of a claim, on a company's assets or value if it is liquidated. Such priorities are determined by the lenders' security documents, intra-creditor agreements and the operation of law.

Rights governing the ability, method and timing of the sale, redemption or other transfer of a security. Includes rights to offer the security for public sale (Demand Registration Rights) rights to buy or sell at an established price or formula (Put/Call) or rights to participate in any sale of a security to a third party (Participation Rights). May be limited by a First Right of Refusal.

An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time.

The group of individuals who make the decisions about how a business is run.

Trained, professional business advisors, available either in person or via the Internet, to provide counseling and advice to small businesses.

Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.

When the exiting management of a company raises capital to buy the business from the previous owners.

The sum of a corporation's long-term debt, stock and retained earnings; also called invested capital. Also, the market price of an entire company calculated by multiplying the number of shares outstanding by the price per share. Also called the market cap or market capitalization.

Absorption by a corporation of one or more other entities through a purchase acquisition or a pooling of interests. Differs from a consolidation in that no new entity is created from a merger.

The level of financing (securities) between senior debt and the equity. Typically, subordinated debt or preferred stock that may have an equity kicker.

Capital needed for major expansion of a business that has established its products and reputation competitively in all of its markets and is at least breaking even. Late-stage venture capital investment.

Significant points in the development of a company that are generally described at the time of an investment. Investors monitor the health of a company by monthly or quarterly reports on sales, revenues, expenses and other agreed upon measurements.

A firm's net worth, minus deductions taken for any assets that might not easily be converted into cash at their full value.

The same as net profit.

The same as working capital.

The present value of an investment's future net cash flows minus the initial investment.

Cumulative operating losses that may be carried back and/or forward (as specified by the tax code) to other tax years to offset taxable income for those years. Under certain circumstances, a loss corporation can acquire a profitable subsidiary and apply its loss carryovers against the profits of that corporation.

A Securities and Exchange Commission (SEC) letter indicating that no civil or criminal action will be taken against an individual engaging in a particular activity; sent in response to a written request for clarification when the legality of the activity in question is not well-established.

Loan which does not meet the standards of the lender.

The day-to-day expenses incurred in running a business, such as sales and administration, as opposed to production, also called operating expenses.

The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale.

A measure of a company's earnings power form ongoing operations, equal to earnings before deduction of interest payments and income taxes. Also called operating profit or EBIT (earnings before interest and taxes).

The cost of passing up the next best choice when making a decision.

Referring to a business that has only one significant product or service and nothing else under development.

The opportunity for potential investors to hear about the business plan from the management team of the company.

A member of a corporation's board of directors who is not an employee of the company.

Same as net worth.

Profit that has been made but not yet realized through a transaction.

Often seen in venture capital term sheets, indicating that one series of equity will have the same rights and privileges as another series of equity ('of equal step' in Latin).

The nominal dollar amount assigned to a security by the issuer. For an equity security, par is usually a very small amount that bears no relationship to its market price, except for preferred stock, in which case par is used to calculate dividend payments.

An investor who does not play an active role in the business.

A U. S. Patent Office statement indicating that a patent has been applied for but not yet granted.

Funds invested for a longer period of time by investors who are willing to allow the company to develop for a period of four to seven years.

The ratio of the initial investment over the annual cash inflows. Measures the number of years required to recover the initial cash investment.

When significant factors within a company are discovered such as failure to comply with securities regulations, ;lack of full disclosure, improperly protected patents, etc.

A collection of investments all owned by the same individual or organization

One of the companies in which any fund or individual has invested.

The amount of a security either owned or owed by an investor or dealer. Also, the financial health of a company. Also a job or role within a company.

Choosing a market niche for a product, taking into consideration price, promotion, distribution, packaging, competition, marketplace needs, etc

Equal to the amount of the investment divided by the percentage ownership that such investment purchases. Also equal to the pre-money valuation plus the company's share of the investment proceeds. Example: If $1 million purchases 25% of the company, the post-money valuation is $4 million.

The right of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of common stock. Most states consider preemptive rights valid only if made explicit in a corporation's charter. Also called subscription privilege or subscription right.

Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Usually does not carry voting rights. Preliminary U-7

A shortened version of the U-7 form requiring preliminary information for investors beginning the analysis of a potential investment.

The pre-investment valuation of the company. Obtained by subtracting the dollar amount of the investment proceeds received by the company from the quotient of the amount of the investment divided by the percentage ownership that such investment purchases.

The discounted value of a series of future cash flows so as to account for the time value of money. Alternatively, the value of a future series of cash flows stated in terms of current dollars.

The ratio of market equity value over shareholders' equity.

The ratio of total market value (equity plus long-term debt) over cash flow. Cash flow is usually defined as EBIT plus depreciation expense. Used as a valuation tool in certain industries such as broadcasting.

The ratio of the market equity value over net income.

The ratio of total market value (equity plus long-term debt) over annual revenues.

The sale of securities directly to institutional investors, such as banks, mutual funds, insurance companies, pension funds and foundations

Agreements or documentation establishing the conditions of a private placement.

The ability to earn a profit.

Is the report that shows a company's profitability. The same as an earnings report.

A business unit or department which is treated as a distinct entity enabling revenues and expenses to be determined so that profitability can be measured.

Net profit after taxes divided by sales for a given 12-month period, expressed as a percentage.

Represents the higher effective price paid by an investor than that paid by the originator of the transaction. Calculated as the share of the risk capital (equity & quasi-equity) contributed minus the ownership percentage which difference is then divided by share of risk capital provided. Granted in recognition of the originator's role in organizing and structuring the investment. Example: If 50% of the risk capital purchases only 40% of the common stock ownership, the promote is 20% [(50%-40%)/50% = 20%].

Having shares available to retail investors in the open market

A company that has issued securities through an offering, and which are now traded on the open market.

An institutional investor permitted under SEC rules to trade private placement securities with other qualified institutional investors without registering the securities with the SEC. Requires a minimum of $100 million in assets under management.

The annual return on an investment, expressed as a percentage of the total amount invested.

Rate of return after adjusting for inflation.

A change in a company's capital structure, such as an exchange of bonds for stock.

The "recapture" of the tax benefit of certain previously taken deductions or credits as ordinary income instead of capital gain. Major types are LIFO Inventory, Investment Tax Credit and Accelerated Depreciation Recapture.

Amounts owed to the corporation, whether or not they are currently due.

Governs the issuance of new securities. It provides a partial exemption from filing provisions of the Securities Act of 1933. The maximum allowable amount to qualify under Regulation A is $1,500,000.

Governs private placements. Private placements occur when issuers directly sell securities to investors subject to strict qualifying requirements and provisions.

A government organization that monitors companies operating in a regulated industry.

The restrictions, licenses, and laws applicable to a product or business, imposed by the government.

Contractual rights, preferences or compensation that may be exercised when a company defaults on a monetary or non-monetary obligation. Examples include an increased interest or dividend rate, mandatory early redemption or assumption of Board control.

Discovering new knowledge about products, processes, and services, and then applying tht knowledge to create new and improved products, processes, and services that fill market needs.

Stock acquired directly from the Company or from an "affiliate" of the Company in a private sale and not pursuant to a registration statement under the Securities Act of 1933. See Control Stock for definition of "affiliate".

Trained, professional business advisors available in person or via the Internet providing counseling and advice to small businesses

The annual rate of return on an investment, expressed as a percentage of the total among invested. Also call the rate of return.

A measure of how well a company used reinvested earning to generate additional earnings, equal to a fiscal year's after-tax income divided by book value, expressed as a percentage.

The internal rate of return on an investment. Profit from an investment, expressed as a percentage of the investment.

Money earned by a company from sales of products or services.

A particular product or service within a company that is expected to provide steady or growing revenue

A private company merges with a publicly listed company that has no assets or liabilities. The private company obtains the majority of the "shell" corporation's stock, changes the name of the public corporation, and appoints and elects its management and board of directors.

An agreement by a bank to lend a specific amount to a borrower, and to allow that amount to be borrowed again once it has been repaid, also called revolving credit.

The variability inherent in investment. The greater the variability, the higher the risk. The quantifiable likelihood of loss of less-than-expected returns.

SEC rule, which governs the sale of "Control Stock" and "Restricted Stock" once a public trading market in the securities exists. See definitions of Control Stock and Restricted Stock.

1) Refers to exemptions from the registration requirements of federal and state securities laws that are so explicit in their requirements that they enable a company to offer and issue securities privately without fear of running violating securities registration requirements. 2) The ability of a company's management to discuss in good faith a company's prospects and financial projections with analysts and investors without fearing

A company that seeks to expand its product line, expand its facilities, identify and penetrate new markets, and continue the growth phase.

The later rounds of expansion financings, which follow the start-up round of financings.

A distinct subset of a market, society, industry, or economy whose components share similar characteristics.

The primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets. The SEC enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act.

Is the Federal Law which covers new issues of securities. It requires full disclosure of material information related to the offering, Some securities such as U. S. Treasuries are exempt from the provisions.

An investment instrument , other than an insurance policy or fixed annuity, issued by a corporation, government or other organization which offers evidence of debt or equity.

Money used for the initial investment in a project or startup company where the product, process or service is in its conceptual or developmental stage.

Analysis to determine how sensitive the ROIs are to variances from the expected values of the key variables (sales growth, margins, interest rates, exit multiples, etc.)

A design, symbol or other mark used to establish the identity and image of a service.

Consolidation of an industry or sector, where the smaller and weaker competitors are acquired or driven out of business.

The parts or portions into which the ownership of a piece of property or business is divided; especially, any one of the equal parts into which the capital stock of a corporation is divided. Certificate representing one unit of ownership in a corporation, mutual fund, or limited partnership.

One who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters.

Sending the business plan to investors to attract interest in a particular company with the expectation of getting in the door for a formal presentation and discussion.

Business employing fewer than 100 people.

A Federal agency that guarantees loans to small businesses and provides management and technical assistance through a network of Small Business Development Centers (SBDC), the Senior Core of Retired Executives (SCORE), and Business Information Centers (BIC).

A private investment company licensed by the Small Business Administration to provide small businesses with debt and equity financing.

The programs, data, routines for use in a digital computer, as distinguished from the physical components (hardware).

An investor who has sufficient knowledge and experience with investing that he/she is able to evaluate the merits of an investment. A requirement for certain exempt offerings (accredited investor).

A new business venture.

Capital needed for ventures with developed product or service, in the process of organizing a new business.

The-post-acquisition tax basis of the acquired company's assets following an asset purchase (as opposed to a stock purchase).

An instrument that signifies an ownership position, or equity, in a corporation, and represents a claim on its proportionate share in the corporation's assets and profits. Also called equities or equity securities or corporate stock.

The representation of the investment of capital in a company in proportion to the amount of the investment made.

Refer to a business relationship undertaken cooperatively by two parties where each contributes different skills and resources and shares in the results of the endeavor.

The process of determining a company's long-term goals and then identifying the best approach for achieving those goals.

Long-term action plan for achieving a goal.

The combination of debt and equity that were used to finance a company.

Junior in priority of claim.

Debt that is either unsecured or has a lower priority that that of another claim on the same asset or property. Also called junior debt.

A certificate, usually issued along with a bone or preferred stock, entitling the holder to buy a specific amount of securities at a specific price, usually above the current market price, for an extended period, anywhere from a few years to forever.

Equity of stock in a company which represents the founder's effort expended in starting the company.

An association of bankers, corporations, investors formed to carry out some financial project requiring capital. Also, a group of investors who act together for the purpose of investing in a company.

An investor asks or interests additional individuals or funds to form a larger pool of capital for a particular deal.

1) Trained, professional business advisors available in person or via the Internet to provide counseling and advice to small businesses. 2) Underwriter as an intermediary between an issuer of a security and the investing public, usually an investment bank at the time of an IPO.

The amount of time an investor allows a company to use the capital before expecting a repayment and the return on the investment. An average is from four to seven years.

An offer agreement stipulating the terms and conditions by which an angel or venture capital investor will provide capital for a company.

The value or amount of a sum of money adjusted by an interest rate for a given time period.

An advertisement in a business newspaper or magazine, placed by an investment bank, announcing an offering and listing the syndicate members.

A company's open account arrangements with its vendors.

A company's vendors.

A distinctive name, symbol, motto, or design that legally identifies a company or its products and services, and sometimes prevents others from using identical or similar marks.

A formula, process, system, tool, etc. that provides a company with a competitive advantage.

An agreement between a buyer and a seller to exchange an asset for payment. In accounting, any event or condition recorded in the books of account.

A sharp, positive reversal in the performance of a company.

Also called the SCOR Form (Small Company Offering Registration) is the main disclosure document for stock offerings in all states accepting SCOR, and may be used as the Model A disclosure document for offerings filed federally under the Securities Act of 1933.

Situation in which a business lacks sufficient capital to perform its normal business activities.

The amount of capital raised that the investor or investment fund has to put to work in a group of businesses in which they invest.

To assume risk, as when offering a policy or bringing a corporation's new securities to the public.

An intermediary between an issuer of a security and the investing public, usually an investment bank.

Agreement between a corporation issuing new securities and the lead underwriter of the syndicate. Makes explicit the public offering price, the underwriting spread, the net proceeds to the issuer, and the settlement date.

Fee charged by a syndicate, equal to the difference between the gross sales to investors and the net proceeds received by the issuer.

Property that is clear of any mortgages, liens or debts.

Baked not by collateral but only by the integrity of the borrower.

An estimate made of the worth of a business, stock or investment in the competitive marketplace. The process of determining the value of an asset or company. Money used for the initial investment in a project or startup company.

The process through which a company acquires a product or service and enhances it in some way before offering it to its customers.

A unit cost which depends on total volume.

A company that supplies parts or services to another company. Also called a supplier.

A risky enterprise.

Funds invested or available for investment at considerable risk of loss in potentially highly profitable enterprises. Funds made available for startup firms and small businesses with exceptional growth potential. Managerial and technical expertise are often also provided; also called risk capital.

An investment company that invests its shareholders' money in startups and other risky but potentially very profitable ventures.

An investment company that invests its shareholders' money in startups and other risky but potentially very profitable ventures.

Limited partnership that is formed to invest in small startup businesses with exceptional growth potential.

Profit making services to match entrepreneurs with investors for a commission or a fee that may be contingent on the outcome of the transaction.

That group of securities to be purchased by the venture investors on a pro-rata basis.

Schedule defining that portion of management's equity ownership that is not subject to forfeiture (or repurchase at a non-market valuation) in the event that employment is terminated. Purpose is to secure the commitment of the management team for the bulk of the investment horizon by phasing in their ownership benefits.

A certificate, usually issued along with a bone or preferred stock, entitling the holder to buy a specific amount of securities at a specific price, usually above the current market price, for an extended period, anywhere from a few years to forever, Also called a subscription warrant.

Capital which is required to finance the ordinary operations of a company such as purchasing raw materials, paying for labor to produce the goods or service, finance accounts receivables etc.

A short-term loan which provides money to buy earning assets.

Situation in which a company's financial troubles necessitate an additional financing, reorganization, restructuring or re-negotiation