- A shares
A class of shares which have specific rights attached to them, as set out in a company’s articles of association. Typically A shares have enhanced voting rights or other benefits compared to other classes of shares, such as B shares.
- Angel investors
Investors who provide investment and other support to early-stage businesses. Traditionally angels are wealthy individuals who have a significant amount of entrepreneurial, industry or investment experience.
- Angel network (or Angel syndicate)
A group of angel investors that pool together money and other resources to invest in, and provide support to, early-stage businesses.
- Articles of association
One of the constitutional documents of a company that sets out its management and administrative structure. The articles dictate the internal affairs of the company such as director and shareholder rights, the issue and transfer of shares, and the organisation of meetings.
- Asset class
A class of economic property that has similar characteristics. Listed shares, government bonds and real estate are all asset classes.
- B shares
A class of shares which have specific rights attached to them, as set out in the company’s articles of association. Typically B shares do not have voting rights or other benefits as compared to A shares.
- Beneficial shareholder / owner
An investor who owns the economic value and other shareholder benefits attached to shares, such as dividends and tax reliefs, but the registered title to their shares is held with another person or entity, often for administrative convenience.
Starting and running a business with no external equity or debt financing.
- Burn rate
The rate at which a company spends its cash.
- Capitalisation table
A table or chart that records all of the shareholders of a company and their percentage of equity, calculated on a fully-diluted basis.
- Convertible equity
An equity investment where money is invested in a company in exchange for shares to be issued at a later date. The share issue is generally triggered by the company raising finance from other investors. In return for investing early, the convertible equity investors receive a discount on the price of the shares issued to the other investors.
- Convertible note
A debt investment where money is invested in a company with the expectation that the debt will “convert” into shares issued at a later date. The share issue is generally triggered by the company raising finance from other investors. Before the conversion, the investor is paid interest.
The funding of projects or ventures by raising money from a large number of people, usually online. The three main types of crowdfunding are equity, debt and rewards/donations.
Money owed by one person/company to another. The borrower has to repay the money a later date, and generally also has to pay interest.
A reduction in the ownership percentage of a share in a company caused by the issue of new shares.
An investment strategy that involves mixing the amount, values and kinds of investments within a portfolio to spread risk and minimise losses.
The distribution of a portion of a company’s profits to investors.
- Drag-along right
A contractual obligation that allows majority shareholders to force minority shareholders to join in the sale of a company on the same terms, valuation and conditions of the majority shareholders.
- Earnings Yield
The earnings yield is the inverse of P/E ratio. The earnings yield ratio shows the percentage of each dollar invested in the stock that was earned by the company.
- Elevator Pitch
An elevator pitch, elevator speech, or elevator statement is a short summary used to quickly and simply define a profession, product, service, organization, or event and its value proposition.
Shares or other securities that represent an ownership interest in a company.
- Equity crowdfunding
A type of crowdfunding that enables multiple investors to a buy shares, or other equity interests, in a company, usually through an online process.
An event when investors may be able to cash in and sell their shares, such as an initial public offering (IPO) or trade sale.
- Fully diluted
All the shares of a company in issue, plus all shares which are the subject of options or other contractual rights to be issued in the future (regardless of whether the right has vested).
An investment opportunity that seeks to raise money to be invested across multiple businesses. Funds campaigns are commonly used to invest in businesses participating in accelerator programmes and competition winners.
The stage that a business is at when it has passed its seed or initial stage, has established proof of concept and is looking to grow.
- Initial public offering (IPO)
The first time that a company's shares are available for public purchase by means of a listing on a stock exchange. This process is also known as going public or floating.
- Intellectual Property
Intangible property that is the result of creativity, such as patents, copyrights, etc.
- Intermediate Term Debt
A type of fixed income security with a maturity, or date of principal repayment that is set to occur in the next 3-10 years.
- Know Your Client (KYC)
The regulatory process that financial services firms and certain other of businesses must perform to verify the identity of their customers to help prevent against money laundering and other financial crimes.
The availability of liquid assets to a market or company.
- Liquidity Event
The merger, purchase or sale of a corporation or an initial public offering. A liquidity event is a typical exit strategy of a company, since the liquidity event typically converts the ownership equity held by a company’s founders and investors into cash.
A person or firm that holds assets such as shares on behalf of another, enabling the nominee to handle complicated administrative matters.
- Ordinary shares
Shares which represent normal equity ownership in a company. Ordinary shares generally entitle the owner to vote at shareholder meetings, receive dividends, and receive distributions on the winding up of a company, but do not carry preferential treatment.
A right granted which gives the receiver the option, but not the obligation, to buy (or sell) shares in a company, or other securities, at an agreed price within a certain time frame.
(Also called anti-dilution) A contractual provision which requires the company to offer its shareholders the chance to purchase additional shares to maintain their percentage of equity in advance of further shares being issued.
- Pitch Deck
A presentation of a summarised business plan.
The period of time after an investment has been made in a company.
A group of financial assets such as shares, property or bonds, held by one person or entity.
- Preference shares
A class of shares which have specific preferential rights attached to them, as set out in the company’s articles of association. Typically the preference will be a dividend paid in priority to other shareholders, or priority to distributions on the winding up of the company.
The potential for losing something of value. With equity investment the main risk to the investor is losing all the money invested.
- Secondary market
A market where investors purchase shares from other investors rather than from the company that has issued the shares directly.
The initial stage of a business, where it is looking to create a minimum viable product establish proof of concept.
- Shareholder agreement
An agreement between a company’s shareholders detailing certain rights and obligations of the shareholders.
An ownership interest in a company which entitles the shareholder to certain rights, for example a share of profits or dividend payments from the company. Shares are also referred to as “stock”.
- Subscription agreement
An agreement between a company and investors purchasing shares in the company. It sets out the terms of the share purchase and details certain rights and obligations of the company and the investors as shareholders.
A newly established business.
- Start-up Capital
The money that is required to start a new business, whether for office space, permits, licenses, inventory, product development and manufacturing, marketing or any other expense.
- Tag-along rights
A contractual obligation which gives minority shareholders the right, but not the obligation, to join a transaction where shares are sold by majority shareholders, on the same terms, valuation and conditions of the majority shareholders.
- Term sheet
A non-binding agreement addressing the basic terms and conditions under which an investment will be made in a business. A term sheet often serves as a template to develop more detailed legal investment documentation.
The monetary worth of a business as determined by considering both qualitative and quantitative factors.