Glossary

Seed
Financing provided to research, assess and develop an initial concept before a business has reached start-up phase.

Start-up
Financing provided to companies for product development and initial marketing. Companies may be in the process of being set up or may have been in business for a short time, but have not sold their product commercially.

Other early stage
Financing to companies that have completed the product development stage and require further funds to initiate commercial manufacturing and sales. They will not yet generate a profit.

Expansion capital
Financing provided for the growth and expansion of an operating company, which may or may not be breaking even or trading profitably. Capital may be used to finance increased production capacity, market or product development, and/or to provide additional working capital.

Late stage investment
Late stage investment capital usually the final round of financing prior to an IPO. This type of  financing is for a company expecting to go public usually within 6 to 12 months, usually so structured to be repaid from proceeds of a public offerings, or to establish floor price for public offer.

Venture capital
Provision of equity for generally young, unquoted companies with high growth potential and high commercial uncertainty – ranges from seed to late stage investment with key feature of being “hands-on” involvement by the finance provider.

Equity
Ownership interest in a company or corporation that is represented by the shares of common of preferred stock held by the investors.

Equity stake
An equity ownership position in the company that is provided to a funding source, usually lenders or other investors, as compensation for providing management consulting, financing, or miscellaneous services.

(BAN) or angel portal
An organisation whose aim is to facilitate the matching of entrepreneurs (looking for venture capital) with business angels. BANs tend to remain neutral and generally refrain from formally evaluating business plans or angels. BANs make a market place for matching services.

Matching process
Any action aimed at facilitating encounters between business angels and entrepreneurs.

Deal/matching
The conclusion of an agreement whereby a business angel invests in a company’s stock.

Investment Forum
A meeting in which entrepreneurs each have 15–20 minutes to present their business project to a range of business angels who have been pre-selected or have previously expressed an interest in one or more of the projects.

Yield rate
The number of investment opportunities that are brought to the attention of investors (by the business angel network) and which resulted in an investment

Syndication
The gathering of several business angels into an informal consortium for the purpose of creating a critical mass of funds above what each business angel could—or would be prepared to—invest. This term also applies to the pooling of competencies in order to offer more managerial skills than any individual business angel could display.

Investment readiness
A privileged moment in time when entrepreneurs are ready to meet and negotiate with business angels, as they understand what the prerequisites of the involvement of the business angel in a company are. (Also applies to other types of investors when the entrepreneur knows what is expected from the different types of financing bodies.

Exit route
The ways in which business angels sell their stake in an investee business. Possible exit routes include management buyouts, sale of stock to another business angel or a formal venture capital firm and – in few cases – listing on the stock market.