There are quite a few words and concepts that you may encounter when you as a startup are looking for funding. Here Johan Sellner, financing coach, has made a list of the most common words.
Business angel
A private investor who provides funding and business expertise, usually to early stage companies.
Buyout
Investments in mature companies, normally with strong cash flows "buyout deals", often combined with borrowed capital.
Direct investment
Investment directly in the equity of an enterprise.
Expansion
Phase where the company is growing and needs additional capital to finance increased production capacity, market and product development. The company may have reached a level where it is breaking even or making a profit.
Fund-of-funds
A fund containing units in other funds.
Company phases
Phases in the development of a company.
Investment phases
Investment phases refer to investments in different stages of a company.
Portfolio company
The company in which venture capitalists invest, i.e. which is part of the investor's portfolio.
Private equity
Time-limited investments in unlisted companies, usually with active ownership involvement. Private equity includes both venture capital and buyout capital.
Venture capital
In this report, venture capital refers to what is known as private equity, i.e. time-limited investments in unlisted companies, usually with active owner involvement. In fact, venture capital is a broader concept that refers to all equity investments, i.e. also in listed companies. Venture capital is thus actually the same as owner capital. Anyone who provides risk capital becomes a shareholder in a company.
Start up
Business phase with product development and initial marketing. The company has just started or has only been running for a short time. The company's products have usually not been launched.
Seed
Business phase of research, assessment and development of an initial concept before the company has reached the start-up phase.
Early growth
Phase where the company has completed product development and needs additional capital to start or develop commercial manufacturing and sales.
The company often does not generate profits.
Venture Capital (VC)
Minority investment in the early stages of an unlisted company's development. Compare buyout investments which refer to majority investments in mature companies. Venture capital is a subset of private equity.
