Angel Investors
Angels are individual who include professional investors, retired executives with business experience and money to invest, or high net worth individuals looking for investment opportunities.

Affiliate
A venture firm that is an associate or subsidiary to commercial banks, investment banks or insurance company. They make investments on behalf of outside investors or parent company’s client.

Balanced Funding
A venture fund investment strategy that includes the investment in portfolio companies at a variety of stages of development.

Bootstrapping
A means of finding creative ways to support a startup business until it turns profitable. This method may include negotiating delayed payment to suppliers and advances from potential partners and customers.

Business Plan
It is a statement of goals, and how to achieve those goals, and rewards the business will reap when those goals are met.

Buyout Financing
Investment intended to support the management acquire a product line or business.

Capital (or Assets) Under Management
The amount of capital available to a fund management team for venture investments.

Corporate strategic investors
When you enter into a strategic partnership with another corporation, which will then extend finance to you, the firm, which provides the finance, is known as a corporate strategic investor. Such business agreements are referred to as strategic alliances or corporate partnerships.

Corporate Venturing
A form of investing by big corporations in opportunities that are congruent with its strategic mission or that will provide business synergy.

Cost of Capital
The rate of return required by investors on the capital provided by them.

Early Stage Financing
Financing in seed stage, startup stage or first stage of a project.

Entrepreneur
One who pursues new business opportunities and assumes inherent risk.

Equity
Ownership in a company. While bonds represent debt, stocks represent equity.

Exit Option
Options available for venture capital firms to liquidate its holdings to realize capital gains on their investment. Options depend on the exit climate including market conditions and industry trends.

Exit Strategy
Strategy adopted by venture capitalists to liquidate its holding to realize capital gains on their investments. It includes providing for a stock buy-back by another firm, arranging a public offering of stock and providing for a merger with a larger firm.

Expansion Stage Financing
Financing in second stage, third stage and mezzanine stage of a project.

First Stage Financing
Financing provided when the firm has begun production and need additional fund for sales.

Flexibility
This ability of a firm to raise further capital from any source it wishes to tap to meet the future financing needs.

Founder Capital
It refers to the individuals own assets including bank balance, certificates of deposit, shares and bonds, cash value in insurance policies, real estate, pension funds, etc.

Fund Size
The total amount of capital committed by the investors of a venture capital fund.

Initial Public Offering
An issue of new stock by a once private company to transform itself into a publicly held one. Many entrepreneurs regard a successful initial public offering (IPO) as the conventional route to secure finance.

Institutional Investors
Organizations whose primary purpose is to invest their own assets or those entrusted to them by others.

Interest
The cost of borrowing money.

Investment
The use of money for the purpose of making more money, to gain income or increase capital, or both.

Investment Philosophy
The stated investment approach or focus of a fund manager/firm.

Later Stage Financing
Financing in third stage and mezzanine stage of a project.

Leveraged Buyout (LBO)
A takeover of a company, using a combination of equity and borrowed fund. Generally, the target company’s assets act as the collateral for the loans taken out by the acquiring group. The acquiring group then repays the loan from the cash flow of the acquired company.

Love Money
It is the finance obtained from family, relatives and friends. A common source of founder capital.

Mezzanine Financing
Financing also called bridge financing, intended for additional expansion of market before the company goes public. Often this financing is structured so that it can be repaid from the proceeds of an IPO.

Partnering
Partnering is a business arrangement with an investor, who intends to gain a quick access to new product/service.

Post-money Valuation
The valuation of a company immediately after the most recent round of financing.

Pre-money Valuation
The Valuation of a company just prior to the most recent round of financing.

Professionally Managed Pools
A type of venture firm which functions in similar term as traditional partners do but the pool is made of institutional money. These funds are typically organized as fixed life partnerships, usually having a life of ten years.

Proposed Financing
Statement of the amount of funds required to move the project from the initial concept stage till the revenue stage. It briefs on how money will be raised in parts and how the proceeds will be used.

Recapitalization
The reorganization of a company’s capital structure. It can be an alternative exit strategy for venture capitalists.

Seed Money
The combination of founder capital and love money. Generally, the amount of seed money raised is small and is suitable for early stage financing.

Second Stage Financing
Financing the working capital requirement for initial expansion of company that is producing and shipping.

Seed Stage Financing
An investment of relatively small size, made at a very early stage of the project where typically a little more than a prototype exist. An investment before there is any real product.

Startup Financing
Financing provided for those companies, ready with a business plan, to support product and market development works.

Third Stage Financing
Financing provided for major expansion of company that is breaking even and is growing.

Traditional Partnership
A type of venture firm wherein, wealthy individuals to manage a portion of their fund establish a partnership. These are private individual firms having no affiliation with any financial institution. Generally investments are made in small companies.

Turnaround Financing
Financing with the intention of turning around the company at the time of financial or operational difficulty.

Venture capital
A main source of financing used to fund startups that do not have access to capital markets. It involves investing in high risk and high return projects that are usually innovative in nature and involving lot of uncertainties.

Venture Capitalist
These are individuals or firm managers who fund startups for equity stake in the business. These are professional investors with vast experience, good contacts and sound business skills, which they bring along with money. They often look for highly profitable businesses that guarantee an immediate return on their investment.

Yield
The amount of money returned to investors on their investments. Also known as rate of return.