What is “Return on Investment” (ROI)?
* The profit or loss from an investment expressed as an annual percentage rate (APR). Calculated by dividing profit or loss by total invested.
What is “Round of Funding?”
* The stage of financing a company is in when receiving funding. For example a company can progress from first round, second round, third round, mezzanine, to preIPO.
What is a “Small Business Investment Companies” (SBIC)?
* Licensed lending and investment firms regulated by the Small Business Administration (SBA). Licensing enables SBICs to borrow money from the federal government to buoy up insufficient private investor funds.
What is “Second Stage Capital?”
* Capital provided a company by a VC firm to enable the business to expand marketing and meet growing production needs because its cash flow is insufficient to handle the needs.
What is a “Secondary Public Offering?”
* A public offering subsequent to the initial IPO. This offering may be made by either the original offering company or by investors holding a large portion of the company’s stock.
What is a “Secondary Purchase?”
* The purchase of stock from a shareholder rather than purchasing directly from the company.
What is “Seed Capital?”
* The first outside money used to purchase equity in a new or existing company. Most seed capital is very small.
What is “Series A Preferred Stock?”
* The first round of stock sold the venture capitalist during the seed or early stage round funding. Depending on the VC contract this form of stock could be convertible into common stock when an IPO is offered or the company is sold outright.
What is a “Silent Partner?”
* An investor who provides only money to a venture without providing expertise.
What is a “Startup?”
* Startup is a business venture in its earliest stage of development.
What is a VC “Syndication?”
* A group of venture capitalists who each invest money in needed to fund a small business.
What is a “Term Sheet?”
* A non-binding agreement provided by the venture capitalist outlining the terms and conditions under which the venture capitalist will invest its money.
What is “Third Stage Capital?”
* Capital provided by investors for market expansion, acquisitions and additional product development.
What is “Turnaround?”
* The reversal of a business from poor performance to good and better performance.
* Investment banking term whereby the underwriter handles the public issue of stock (IPO) and if the IPO fails the investment bank will purchase the securities and put them on their own books.
What is a “Venture?”
* A start up company that is risky.
What is “Venture Capital?”
* Money and expertise provided by a group of investors to a business small or start up businesses.
What is a “Venture Capital Firm?”
* An organized firm that invests shareholder money in high risk but potentially highly profitable small and medium sized businesses.
What is a “Venture Capital Limited Partnership?”
* A limited partnership organized by a VC firm designed to invest in small and medium sized businesses.
What is a “Venture Capitalist?”
* An investor who provides their own financial and intellectual capital or their firm’s investment capital to build a small or medium sized business.