Definition Of Venture Capital Terms

venture capital glossary
Interest is added to the principal balance of the bond and is either paid at maturity or the bond begins to pay both principal and interest based on the accrued principal and interest to that point. The bond is sold at a discount to its maturity value based on a financial calculation that will yield a specific amount. A demonstration of the feasibility of a concept that a startup is based on, often necessary for pitching to VCs. We have everything you need to build a successful, high-growth company—the right way. vulture capitalist A VC whose operating method is to deliberately take advantage of an entrepreneur’s troubles. unissued shares The total number of shares that are authorized to issue, but have not yet been issued to shareholders. Mathematically, this is the difference between authorized shares and issued shares.
venture capital glossary
Backing Away– Broker–dealer’s failure, as market maker in a given security, to make good on a bid for the minimum quantity. This practice is considered unethical and a violation of SEC Rule 11Ac1-1. At Par– At a price equal to the face, or nominal, value of a security. Btcoin TOPS 34000$ Articles Of Incorporation– Document filed with a US state by the founders of Corporation. After approving the articles, the state issues a certificate of incorporation; the two documents together become the charter that gives a Corporation its legal existence.
Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated and the United States venture capital glossary gains entrepreneurial spirit as it meets its specific research and development needs. Senior Debt– Debt that is given a priority before other debt in terms of claims if the issuer goes bankrupt. If the issuer goes bankrupt, senior debt must be repaid before other creditors receive any payment.
The broker assumes that the customer is making the trade because of access to insider information that will make the stock or bond rise or fall sharply. Outside Director– Board of Director Member who is not a company employee. They are valuable because it is assumed they bring an unbiased opinion and diversity to the corporate decisions. The lender has no recourse to other assets of the borrower and cannot any further compensation, even is the lender does not receive the full amount of the loan from the value of the collateral. The borrower can fulfill the obligation to repay the loan by surrendering the collateral. Newco– The typical generic label for any newly organized company, particularly in the context of a leveraged buyout.

  • The aim may be to gain access to a particular product or technology that the start-up company is developing, or to support young companies that could become customers for the corporation’s products.
  • Fund raising– The process by which a private equity firm solicits financial commitments from limited partners for a fund.
  • Firms typically set a target when they begin raising the fund and ultimately announce that the fund has closed at such-and-such amount.
  • For example, one venture capital firm might sell its stake in a private company to another venture capital firm.
  • This type of buy-out happens when an investment firm’s holding in a private company is sold to another investor.
  • But sometimes the firms will have multiple interimclosingseach time they have hit particular targets (first closings, second closings, etc.) and final closings.

The lenders must follow the rules set out in Regulation B when processing an applicant’s application for consumer credit. Reconfirmation– The act a broker/dealer makes with an investor to confirm a transaction. Quorum– A minimum number of Binance blocks Users people who must be present at a meeting to transact business legally, usually a majority. A quorum may be required at a board of directors, committee, shareholder, legislative, or other meeting for any decisions to have legal standing.
Supported by a staff of about 2,000, the Board is composed of seven members (“Governors”), who are appointed by the President and confirmed by the Senate. Board members have responsibility for the conduct of U.S. monetary policy, a responsibility they carry out as members of the Federal venture capital glossary Open Market Committee. The most famous example is Black Tuesday, October 29, 1929; the market fell suddenly and dramatically, signaling the start of the Great Depression. Bear Hug– In order to increase the pressure on a target company an offer is made directly to the Board of Directors.

Affinity Ventures

Debenture– A type of debt instrument similar to a promissory note. It is backed only by the integrity of the borrower and documented by an agreement called and indenture. Credit Spread– When the value of a high-premium option sold exceeds the value of a low-premium option bought in the same class but with a different strike price, the difference is the credit spread.

Venture Capital Terms

Equity Carve-Out– A clause present in deal documentation that reserves a percentage or fixed amount of preferred proceeds for a particular holder. The carve-out can be assigned any seniority and thus any position within the preference distribution stack. Economic Indicators– The key statistics showing the direction of the economy. Among them are the unemployment rate, inflation rate, factory utilization rate, and balance of trade. Eating Stock– An underwriter who can’t find a buyer may have to buy the stock for his own account. However, to cover for risk associated with not being able to find enough buyers for an issue, underwriters charge an underwriting fee. Thus, even in an underwriter is “eating” stock; he/she might still make a profit on the deal.
Under this Act, the CFTC has authority to establish regulations that are published in title 17 of the Code of Federal Regulations. Collateral– A pledged asset used as security against an obligation, such as a loan of money. The borrower can lose the asset if the terms of the security agreement are not met. Chief Compliance Officer – The officer of an Investment Adviser who implements the adviser’s Compliance Btc to USD Bonus Program which is required under the Advisers Act. The program usually includes policies related to insider trading, conflicts of interest, and trade allocations. According to the Adviser’s Act a CCO must be maintained at all times during its registration with the Commission. Cats and Dogs– Speculative stocks that have short or suspicious histories of sales, earnings, and dividend payments.
Senior debt is often secured by collateral on which the lender has a first lien. Cannot use general solicitation or advertising to sell the securities. Rule 147– Provides an exemption from the registration requirements of the Securities Act of 1933 for intrastate offerings, if certain requirements are met. One requirement is that 100% of the purchasers must be from within one state. Rule 144A– An exemption from the registration requirements of Section 5 of the 1933 Act for resale’s of certain restricted securities to qualified institutional buyers.
venture capital glossary

Investment Terms Glossary

Call Premium– The amount in excess of par value paid by a company when it calls a security. The issuer pays the premium to the security holder in order to acquire the outstanding security before the maturity date. Callable Bond– A callable bond allows the issuer of the bond to retain the right of redeeming the bond, on the call date, at some point before the bond reaches its date of maturity. The issuer has the right, but not the obligation, to buy back the bonds from the bond holders at a defined call price. Business Judgment Rule– Assuming the Board of Directors is acting in the best interests of the shareholders, unless it can be clearly established that it is not, the Board of Directors are operating with “Good Faith”. If the board was found to violate the business judgment rule, it would be in violation of its fiduciary duties to shareholders. Board of Governors of the Federal Reserve System– Federal government agency that is the governing body of the Federal Reserve System.
The “liar” term comes from the idea that the borrower’s income and/or assets to qualify for a larger loan have been overstated. Typically, the borrower’s income or assets are overstated and the lender does not verify the numbers. Joint Venture– A Joint Venture is when two or more companies, leveraging their strengths, work together on a project. The two companies usually have complementary technology and wish to create a product or service that plays to their combined strength. IRA Rollover– A contract entered into between an investment adviser and a client that provides for delegation of discretionary authority, indemnification and the payment of compensation.
venture capital glossary
Right of First Refusal– The right of first refusal gives the holder the right to meet any other offer before the proposed contract is accepted. If the holder of the right does not enter into an agreement, the company can open the bidding up to others. Revlon is active when the company is up for sale and is to be broken up. Revlon imposes upon venture capital glossary directors of Delaware corporations a duty to conduct an auction when a company is for sale. Regulation D contains the rules providing exemptions from the registration requirements. Regulation B– This regulation prohibits discrimination based on of age, gender, ethnicity, nationality, marital status or the receipt of public assistance.

Corporate Venture Capital

For example, buy a Jan 50 call on ABC for $2 and writing a Jan 45 call on ABC for $5. Covenant– Formalized rules on a loan agreement that require certain financial conditions be met or prohibit other financial actions by the borrower. For example, a covenant may limit the payment of dividends, how much additional debt can be issued, and require financial targets such as sales and earnings to be met. If a covenant is violated, then the bank or loan issuer can require immediate payment. Commodities Exchange Act of 1936 – The Commodity Exchange Act regulates the trading of commodity futures in the United States. The CEA establishes the statutory framework under which the CFTC operates.
An accountant’s proposed financial statement for a business based on the assumption that certain events occurred. Private Letter Ruling– Internal Revenue Service response to a request for interpretation of the tax law with respect to a specific question or situation. The letter gives guidance as to what to expect from the IRS in terms of a tax treatment for the specific question submitted. Piggybacking– A broker, illegally, buys or sells stocks or bonds in his personal account after a customer buys or sells the same security.