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Financing Terms


Here are some of the most widely-used financial terms in the high-tech industry, all of which are frequently referenced on the IVC website. The Keyword Glossary provides a wealth of terms and definitions to help you gain a better understanding of the global VC and PE world and to make your searches more efficient.

Exits

Acquisition (Takeover)

Acquiring control of a corporation, called a target, by stock purchase or exchange, either hostile or friendly.

Initial Public Offering (IPO)

The first sale of stock by a company on the public market.

Merger

The combining of two or more entities into one, through a purchase acquisition or a pooling of interests. Differs from a consolidation in that no new entity is created from a merger.


Venture Capital Terms

Employee Stock Ownership Plan (ESOP)

A trust established by a corporation for the allocation of some of its stock to its employees over time, intended to motivate employees, and often providing tax benefits to the company. Also called stock purchase plan.

Extended Round

Additional funds put in a company, by either a new shareholder or an existing one, received in a separate or later tranche within the frame of a single series or round of investment. In many cases, the original round deadline is extended to a later date, allowing new shareholders to invest in the company under the same terms as investors in the earlier round.

Fully Invested

An investment entity that has no cash or cash equivalents for new investments. It makes follow-on investments only.

Lead Investor

A company's principal provider of capital, such as the entity, which originates and structures a syndicated deal.  

Term Sheet

In venture capital, a document summarizing the details of a potential venture capital investment, which serves as the basis for a final business agreement.

Venture Leasing

A financing vehicle for infrastructure and equipment needs, in cases when a company doesn't qualify for bank or traditional leasing financing or when additional venture capital may either be unavailable or trigger unwanted penalties in the original venture-capital agreement.

Venture Lending

A middle ground of financing for firms that need equity capital, don't want or can't get sufficient bank financing, but that are not yet ready to go public with their products or services.

Write-Off

To charge an asset amount to expense or loss, in order to reduce the asset value.

PE Terms

Bridge Loan

Short-term financing which is expected to be paid back relatively quickly, such as by a subsequent longer-term loan. Also called bridge financing. Usually convertible to equity.

Equity Financing

Financing by selling common stock or preferred stock to investors.

Leveraged Buyout (LBO)

Takeover of a company or controlling interest in a company, using a significant amount of borrowed money.

Management Buyout

Takeover of a company through management's purchase of all outstanding shares.

Mezzanine Financing

Late-stage venture capital, usually the final round of financing prior to an IPO.

Private Investment in Public Entity (PIPE)

A transaction in which accredited investors are allowed to purchase stock in a public company, usually below the market price. The stock is registered with the SEC so that it may later be resold to the public.

 

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