Glossary

A

AMF (Autorité des Marchés Financiers)

Learn about the AMF (Autorite des Marches Financiers), France's financial sector regulator overseeing markets, investment products, and investor protection.

AML (Anti-Money Laundering)

Anti-Money Laundering (AML) compliance is crucial for VC funds to maintain clean capital, protect their reputation, and meet regulatory requirements.

Angel Investor: Definition & How to Find Them

Discover how angel investors use their personal funds to support startups, trading capital for equity or convertible debt.

AUM (Assets Under Management)

Assets Under Management (AUM) represents the total market value of investments managed by a financial institution or fund manager on behalf of clients.

B

Bear Market: Definition & Investment Meaning

A bear market is a prolonged period when securities prices fall 20% or more from recent highs. Learn how to navigate declining markets as an investor.

Bridge Round: Definition & When to Use It

A bridge round provides short-term capital to startups between major funding rounds. Learn when bridge financing makes sense and its key terms.

Bull Market: Definition & Investment Meaning

A Bull Market is a period in the financial markets when the prices of assets are rising or are expected to rise.

C

Capital Call/Drawdown

Learn how a capital call, also known as a drawdown, works as a request from an investment firm to investors.

Cap Table: What It Is & How It Works

Understand how a cap table works as a crucial tool for tracking equity ownership, investor stakes, and dilution in startups and investment vehicles.

Cap vs Uncapped: Convertible Note Terms

Understand capped vs uncapped convertible notes and how valuation caps protect early investors by limiting the conversion price in future funding rounds.

Carried Interest/Carry

Carried interest aligns investment managers' interests by granting a share of profits beyond their contributions.

Common/Preferred Stock

Know the differences between common stock and preferred stock, in terms of voting rights and dividend priority in a company.

Contributions: Capital Calls & Fund Investing

These are funds provided by investors or partners for use in making investments in assets or companies.

Convertible Debt / Convertible Note

What is a convertible note and how does it work? Learn about this popular startup financing instrument that converts debt into equity at a future round.

CSSF (Commission de Surveillance du Secteur Financier)

Learn the role of the CSSF (Commission de Surveillance du Secteur Financier), Luxembourg's Financial Sector Regulator.

D

Distributions: How Fund Profits Are Paid

Distributions return capital and profits to investors from a fund's investments. Learn how and when LPs receive payouts from successful exits.

DPI (Distributed to Paid-In)

DPI (Distributed to Paid-In) is a vital venture capital metric used by LPs to evaluate fund performance.

Drag-Along Rights

Drag-along rights enable majority shareholders to compel minority participation in a sale, simplifying transactions.

E

Equity Round: Startup Funding Explained

Learn about equity rounds, the process of selling company shares to raise capital. Understand how startups use equity financing to fund growth and expansion.

F

Fund of Funds: Definition & Structure

What is a FoF investment strategy, and what are the benefits and drawbacks for investors, including LPs?

Investment Fund: Definition & Types

An investment fund is a pool of capital from the fund's investors, dedicated to make one or several investments.

G

GP (General Partner)

Know how General Partner (GP) plays a pivotal role in managing funds and making investment decisions.

H

Hurdle Rate: Definition & How It Works

The "Hurdle Rate" in venture capital is the minimum return required for General Partners to start earning a carried interest.

I

IRR (Internal Rate of Return)

Is Internal Rate of Return (IRR) a reliable metric for venture capital investments? Learn how IRR measures fund performance and its limitations.

K

KYC (Know Your Customer)

KYC is a vital process in venture capital, verifying investor identities to reduce risks, including reputational damage and regulatory penalties.

L

LP (Limited Partner)

Limited Partners (LPs) are vital investors in venture capital, providing capital for GPs to invest in startups in exchange for a share of returns.

M

Most Favored Nation (MFN) Clause

The Most Favoured Nation (MFN) clause protects early investors by ensuring they receive the best terms offered to later investors in subsequent rounds.

Multiple (Investing)

What does multiple mean in the investment context? The exit multiple is a measure of the performance of an investment. Learn how to compute it here.

P

Pre-emption Rights

Grant existing shareholders priority to buy new shares in initial offerings, distinct from pro-rata rights.

Pre-Money/Post-Money Valuation

Both of these terms are crucial in determining how much of the company an investor will own after the investment.

R

Funding Round: What It Is & How It Works

In venture capital, a funding round is when a private company offers shares to investors. Understand the process and key terms of startup fundraising.

Right of First Offer (ROFO)

ROFO: Allows existing shareholders to buy shares before external parties, with a time constraint, differing from ROFR.

S

Secondary Transaction

Learn about secondary transactions, which allow early investors, employees, and founders to sell their shares before an IPO or acquisition exit event.

T

Tag-Along Rights

Tag-along rights protect minority shareholders by allowing them to join when majority shareholders sell their stake, ensuring fair treatment in exits.

TVPI (Total Value to Paid In)

What is Total Value to Paid In (TVPI) in venture capital, and how is it calculated to assess investment performance?

U

UBO (Ultimate Beneficiary Owner)

Know why UBO is crucial for compliance with anti-money laundering laws and understanding who is actually in control of a company.

Unicorn Startup: Definition & Examples

A unicorn is a privately held startup company valued at over $1 billion USD. Discover how companies achieve unicorn status and what it means for investors.

V

Venture Capital Scout

Learn what a VC scout does, what qualifications you need to join a venture capital scout program, and discover the advantages for investors and scouts alike.

Venture Round: Startup Funding Stage

What is a venture round and how does it work? Learn about Series A, B, C funding stages and how startups raise capital from venture capital investors.

Z

Zombie Company: Definition & Warning Signs

A Zombie Company is a firm that, although still in operation, is unable to grow or cover its debt servicing costs with its current earnings.