Crowdfunding terms explained

Learn about the terms and concepts used in crowdfunding and investing.

Crowdfunding and investing terms beginning with AA

Asset Class

A group of financial instruments that have similar financial characteristics and behave similarly in the marketplace.

Angel Investor

An individual who provides capital for a business startup, usually in exchange for ownership equity or convertible debt.

ARR (Annual Recurring Revenue)

The value of the recurring revenue of a business generated within a year. It is primarily used for businesses operating a subscription-based model.


The process of gradually writing off the initial cost of an asset over a period of time.

Accounts Payable

Money owed by a company to its creditors.

Accounts Receivable

Money owed to a company by its debtors.


A program that gives developing companies access to mentorship, investors, and other support to help them become stable, self-sufficient businesses.

Crowdfunding and investing terms beginning with BB

Business Plan

A document that details a company's goals and the strategy for achieving them.


A standard against which the performance of a security, mutual fund, or investment manager can be measured.


Starting a business without external help or capital and growing it solely through existing cash flow.

Burn Rate

The rate at which a startup spends money that is over and above its income.

Bridge Loan

A type of short-term loan, typically taken out for a period of 2 weeks to 3 years to finance a company until it can secure more permanent financing.


A type of loan investors give to entities like corporations or governments; the entity promises to pay back the money with interest after a certain period.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Crowdfunding and investing terms beginning with CC


The collection of funds from a large number of people, typically via the internet, to finance a project or business.

CySEC (Cyprus Securities and Exchange Commission)

The financial regulatory agency in Cyprus, responsible for overseeing securities exchanges and market participants.


A fee charged by a company for providing a service. In this case, Crowdbase's fee for facilitating a successful crowdfunding campaign.

CIE (Certificate of Innovative Enterprise)

A certification that provides tax benefits for Cyprus residents investing in innovative companies.

Capital Structure

The mix of debt and equity that a company uses to finance its operations and growth.

Commercial Real Estate

Property that is used solely for business purposes. Examples include office buildings, retail centres, and hotels.

Churn Rate

The rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period.

Cap Table

A spreadsheet or table that shows the equity capitalisation for a company, including the percentage of ownership, equity dilution, and value of equity in each round of investment by founders, investors, and other owners.

Capital Gains

The increase in the value of an investment or real estate that gives it a higher worth than the purchase price.

Capital Market

A place where buyers and sellers engage in trade of financial securities like bonds, stocks, etc.

Convertible Equity

A type of investment that changes into equity in the future upon the occurrence of certain triggers.

Cap Rate (Capitalisation Rate)

A rate that helps in evaluating a real estate investment that generates income. Cap Rate = Net Operating Income / Current Market Value.

Capital Stack

The total capital invested in a project, including both debt and equity, and the relative priority of claims.

Convertible Note

A form of short-term debt that converts into equity, typically in conjunction with a future financing round,

CAGR (Compound Annual Growth Rate)

A measure of an investment's annual growth rate over a specified period of time, assuming profits were reinvested.

CAC (Customer Acquisition Cost)

The cost associated with convincing a potential customer to buy a product/service, including research, marketing, and advertising costs.

CAPEX (Capital Expenditure)

Money spent by a business on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

Current Assets

All assets that a company expects to convert to cash within one year in the normal course of business.

COGS (Cost Of Goods Sold)

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor directly used to create the good.

Cash Flow Statement

A financial statement that provides data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities during a given period.

Crowdfunding and investing terms beginning with DD


Money that is borrowed and must be paid back, often with interest.

Due Diligence

The process of investigating and verifying the details of a potential investment or business partnership.


The strategy of spreading investments among different types of assets to reduce risk.


Payments made by a corporation to its shareholders, usually in the form of cash or additional shares.

D/E (Debt-to-Equity Ratio)

A measure of financial leverage, showing the proportion of a company's funding that comes from creditors versus that which comes from investors.


Short for "pitch deck", it's a presentation that founders show to venture capital investors when seeking a round of financing.


Financial contracts whose value is linked to the price of an underlying asset.

Disruptive Technology

An innovation that significantly alters the way that consumers, industries, or businesses operate.


A reduction in the ownership percentage of a share of stock caused by the issuance of new stock.

Disposable Income

The amount of money that an individual or household has to spend or save after taxes have been paid.

Debt Financing

The process of raising capital by borrowing money, typically in the form of a loan from a financial institution.


The allocation of the cost of assets over their expected useful life, used for accounting and tax purposes.

Crowdfunding and investing terms beginning with EE


Ownership interest in a company, usually in the form of stocks or shares.

Equity Stake

Ownership interest in a company or property.

Exit Strategy

A way to transition one's ownership of a business to another party, or to cease trading in the marketplace. Common strategies include mergers & acquisitions (M&A), strategic acquisitions, and initial public offerings (IPOs).

Equity Crowdfunding

The process whereby people (i.e., the 'crowd') invest in an early-stage unlisted company in exchange for shares in that company.

Exit Fee

A charge that an investor may have to pay to sell an investment, usually as a percentage of the profits.

Elevator Pitch

A brief, persuasive speech that entrepreneurs use to spark interest in their startup.

EBIT (Earnings Before Interest and Taxes)

An indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest.

EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortisation)

A measure of a company's operating performance. Essentially, it's a way to evaluate a company's performance without having to factor in financing decisions, accounting decisions or tax environments.

Equity Financing

The process of raising capital through the sale of shares in a company.

Crowdfunding and investing terms beginning with FF

Financial Instruments

Contracts that can be traded on the financial market, including stocks, bonds, derivatives, etc.

Fixed Income Investment

An investment that provides a return in the form of fixed periodic payments and eventual return of principal at maturity.

Financial Advisor

A professional who provides financial services to clients based on their financial situation.

Fragmented Market

A market structure with many participants, none of which has a significant share of the market.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting. It is not necessarily the same as the calendar year.

Fixed Assets

Long-term tangible pieces of property or equipment that a firm owns and uses in its operations to generate income.

Crowdfunding and investing terms beginning with GG

GDP (Gross Domestic Product)

The total value of goods produced and services provided in a country during one year.

Go-to-Market Strategy

The plan of an organisation, utilising their inside and outside resources, to deliver their unique value proposition to customers and achieve competitive advantage.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Gross Margin

The difference between revenue and cost of goods sold (COGS), divided by revenue, expressed as a percentage.

Crowdfunding and investing terms beginning with HH

Holding Fee

A charge for holding onto an asset or investment on behalf of a client.


Making an investment to reduce the risk of adverse price movements in an asset.

Crowdfunding and investing terms beginning with II

IPO (Initial Public Offering)

The process of a private company going public by selling its shares to the general public for the first time.

Investment Fee

A charge that a client pays to a financial advisor or investment firm for facilitating an investment.

IRR (Internal Rate of Return)

The discount rate that makes the Net Present Value (NPV) of a project zero. It's an indicator of the profitability, efficiency, or quality of an investment.


A company that helps new and startup companies to develop by providing services such as management training or office space.


A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold.

Income Statement

Also known as the Profit and Loss Statement, it is a financial document that shows how much money a company made (revenue), how much it spent (expenses), and the resulting net income over a certain period of time.

Crowdfunding and investing terms beginning with KK

KYC (Know Your Client)

The process of a business verifying the identity and risk level of a client.

KIIS (Key Investor Information Sheet)

The KIIS offers a clear and easy-to-understand summary of critical information about each crowdfunding campaign in a standardised format.

KPIs (Key Performance Indicators)

Specific measurable values that demonstrate how effectively a company is achieving key business objectives.

Crowdfunding and investing terms beginning with LL


The ability to quickly buy or sell an asset without causing a significant change in its price.


The use of borrowed money to increase the potential return of an investment.

Lean Startup

A methodology for developing businesses and products, which aims to shorten product development cycles and rapidly discover if a proposed business model is viable.

Lead Investor

The firm or individual that organises a round of financing for a company and usually contributes the largest amount of capital to the deal.


The debts and obligations that a company owes, which are settled over time through the transfer of economic benefits including money, goods, or services.

Crowdfunding and investing terms beginning with MM

MBO (Management Buyout)

A transaction where a company's management team purchases the assets and operations of the business.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, etc.

Mezzanine Financing

A hybrid of debt and equity financing typically used to finance the expansion of existing companies.

Market Volatility

The rate at which the price of an asset increases or decreases for a set of returns.

Maximum Investment

The largest amount of money that an investor can invest in a crowdfunding campaign.

Market Gap

An opportunity created by an unmet market need or where demand exceeds supply.

Minimum Investment

The smallest amount of money that an investor can invest in a crowdfunding campaign.

MVP (Minimum Viable Product)

A version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

Market Share

The percentage of an industry or market's total sales that is earned by a particular company over a specified time period.

Maximum Target

The largest amount of funding a company can raise through the crowdfunding campaign.

Minimum Target

The smallest amount of funding a company needs to raise in a crowdfunding campaign in order for the campaign to be successful.

Market Consolidation

When a market is dominated by a small number of players, often because of mergers and acquisitions.

M&A (Mergers and Acquisitions)

The process of combining two companies (merger) or one company buying another (acquisition).

MRR (Monthly Recurring Revenue)

The value of the recurring revenue of a business generated within a month. It is primarily used for businesses operating a subscription-based model.

Crowdfunding and investing terms beginning with NN

NPV (Net Present Value)

A calculation that indicates the current value of a series of future cash flows.

NAV (Net Asset Value)

The total value of an entity's assets minus its liabilities.

Net Profit

A company's total earnings, also known as net income; calculated by taking revenues and adjusting for the cost of doing business, taxes, and other expenses.

Net Margin

The percentage of revenue remaining after all operating expenses, interest, taxes and preferred stock dividends (but not common stock dividends) have been deducted from a company's total revenue.

Crowdfunding and investing terms beginning with OO

OPEX (Operating Expenses)

The costs associated with running a business's core operations on a day-to-day basis.

Organic Growth

The growth rate a company achieves by increasing output and enhancing sales internally, not through mergers and acquisitions.

Crowdfunding and investing terms beginning with PP

Pitch Deck

A presentation used to provide an overview of a business plan to potential investors.

Private Company

A company that is owned by a small group of people or a single entity and its shares are not available to the general public.

Public Company

A company whose shares can be freely traded on a stock exchange by the general public.

Preferred Equity

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock.

Pro Rata

A Latin term meaning "in proportion". Most often used in venture capital contracts to give investors the right to participate in future funding rounds so they can maintain their percentage of ownership in a company.


A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, as well as their fund counterparts.


A shift in strategy that helps a startup test a new approach for achieving its business goals.

Pre-Money Valuation

The current valuation of a company before any investment is made in the company.

Post-Money Valuation

The estimated valuation of a company after outside investments are made in the company. It is calculated as the Pre-Money Valuation + Investments made in the current financing round.

Portfolio Company

A company or entity in which a venture capital firm, buyout firm, or holding company invests.

Payback Period

The amount of time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.


A method by which financial results are calculated. This method of calculation places emphasis on present or projected figures.

Crowdfunding and investing terms beginning with RR

Retail Investors

Individual investors who buy and sell securities for their personal account, not for a company or organisation.


How long a startup can stay alive with the amount of funding it currently has before it needs to secure additional funding or achieve profitability.

ROI (Return on Investment)

A measure used to evaluate the efficiency or profitability of an investment.

Risk Tolerance

The degree of variability in investment returns that an investor is willing to withstand.

REIT (Real Estate Investment Trust)

A company that owns, operates, or finances income-generating real estate.


The total amount of money a company brings in from its business activities, before expenses are deducted.

Revenue Streams

Different ways in which a business makes money, through sales, subscriptions, advertising, etc.

Retained Earnings

The net income left over for the business after it has paid out dividends to its shareholders.

Real Estate Crowdfunding

The collection of funds from multiple individuals through a crowdfunding platform to invest in a real estate project.

Crowdfunding and investing terms beginning with SS

SMEs (Small and Medium-sized Enterprises)

Businesses that are not large-scale, but also not considered startups or micro businesses.


Financial instruments, like stocks or bonds, that represent an ownership interest, a creditor relationship, or rights to ownership.


An individual, company, or institution that owns at least one share of a company's stock.

Stock Exchange

A marketplace where stock brokers and traders can buy and sell securities.


A newly established business, usually small, started by one or a group of individuals.

SOM (Serviceable Obtainable Market)

The portion of the Serviceable Available Market (SAM) that a business can realistically capture.

Seed Capital

The initial capital used to start a business, often coming from the founders' personal assets, friends or family, for covering initial operating expenses and attracting venture capitalists.


The capacity of a system, network, or process to handle a growing amount of work, or its potential to be enlarged to accommodate that growth.

Series A,B,C Funding

Terms used to define the different rounds of funding for a startup. Series A is typically the first round of institutional funding following seed capital, followed by Series B,C, and so on.

Share Price

The cost of purchasing a single share of a company's stock.

SAM (Serviceable Available Market)

The portion of the Total Addressable Market (TAM) that can actually be reached by a company's products or services.

Secondary Market

A market where investors purchase/sell securities from/to other investors, rather than from the issuing companies themselves.


In the context of debt, this refers to the order of repayments in the event of a sale or bankruptcy of the borrower.

SaaS (Software as a Service)

A software licensing model in which access to the software is provided on a subscription basis, usually over the internet.

Crowdfunding and investing terms beginning with TT


Proof that a startup's business model is successful, often evidenced by number of users, user engagement, and/or revenue.

Term Sheet

A non-binding agreement that shows the basic terms and conditions under which an investment will be made.

TAM (Total Addressable Market)

The maximum amount of revenue a business can generate by selling their product or service in a specific market.

Crowdfunding and investing terms beginning with UU


The process through which an individual or institution takes on financial risk for a fee.


A startup company with a current valuation of more than $1 billion.

USP (Unique Selling Proposition)

The factor or consideration presented by a seller as the reason that their product or service is different from and better than that of the competition.

Crowdfunding and investing terms beginning with VV


The process of determining the current worth of an asset or a company.

Vetted Investment

An investment opportunity that has been thoroughly investigated and evaluated for potential risks and rewards.

Venture Capital

A type of private equity and a form of financing that investors provide to startups and early-stage companies.

Valley of Death

A phase during the life of a startup when it is in between initial funding and generating steady revenues. During this phase, the startup lacks the cash inflows necessary to sustain operations.

Venture Capitalist

An investor who provides capital to startups with high growth potential in exchange for an equity stake.

Venture Debt

A type of debt financing provided to venture-backed companies by specialised banks or non-bank lenders.

Crowdfunding and investing terms beginning with YY


The income return on an investment, such as the interest or dividends received from holding a particular security.

Crowdfunding and investing terms beginning with ZZ


A tool used by local governments to control the development and use of property within their jurisdiction.