Glossary of Venture Capital Terms
Every type of financial activity seems to have its own jargon and slang. A glossary of venture capital terms would read much like a standard investment glossary with a few special terms added.
Every form of investment activity from the stock market to simple certificates of deposit seems to have a unique set of terms that tend to confuse the beginner. Often times these terms tend to make us think that the activity is a lot more complex than it really is, but knowledge of them also helps to understand what is being said in journals and reports where the terms are often employed. The venture capital field is no exception, but the list of unusual terms here is not very long. A glossary of venture capital terms would read very much like the glossary of standard fund investment.
There is private equity where refers to investments that do not involve stock share ownership. It is said that venture capital is often used to lead up to an IPO. This is an initial public offering of stock. Other terms commonly used are pooled investment and acquisition. A pooled investment is simply the funds from two or more investors combined to create a fund. An acquisition is the take over of the control of an existing company. These terms are common in venture capital, but are also well known in other forms of investment as well.
Some terms that are more unique to venture capital include VC and General Partner. A VC is the same as a general partner and both titles refer to a top executive in a venture capital firm. An associate is an apprentice or lower level executive in a venture capital firm. Due diligence is the research usually done by an associate to determine the viability and potential of an investment deal.
An adventure capitalist is an entrepreneur that invests in companies and takes, or seeks to take an active part in their operation. An angel investor is usually a rich private investor who provides start up capital with expecting an equity or ownership interest in the enterprise. Bootstrapping refers to the self financing of a company up to the point where it has reached a level of acceptability to a venture capitalist or angel investor.
These terms represent just some of the special terms used in the field of venture capital investment. Venture capitalist use many of the more common terms used in many other financial fields such as banking and even stock markets. The full glossary of venture capital terms would read much like a basic financial or investing glossary.