Crowdfunding terms explained

A common fee structure in private equity and hedge funds where the fund charges 2% of total assets as management fees and 20% of profits as a performance fee.

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

Money owed by a company to its creditors.

Money owed to a company by its debtors.

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

The first significant investor in a fundraising round who often plays a pivotal role in attracting other investors.

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

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

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

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

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

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.

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

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.

An informal round of financing meant to bridge the gap between more substantial financing rounds.

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

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

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

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

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

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.

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

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

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

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

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

The share of any profits that the general partners of private equity and hedge funds receive as compensation, even if they contributed no initial funds. This serves as a performance incentive for the general partner.

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.

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.

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

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.

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

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

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

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

An instance where existing equity holders see their stake diluted due to a new issuance of equity at a lower valuation.

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

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

A liquidity ratio that measures a company's ability to cover its short-term obligations with its short-term assets. It's calculated by dividing current assets by current liabilities.

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

The rate at which investment offers are presented to financing institutions or investors.

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

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

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

A startup company valued at over $10 billion. It follows the term "Unicorn", which describes startups valued at over $1 billion.

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

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

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

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

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

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

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

This is a financial ratio that indicates how much a company pays out in dividends each year relative to its stock price. It's calculated by dividing the annual dividend by the current stock price.

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

A round of funding where companies sell their shares at a lower price than in the previous round, leading to ownership dilution for existing shareholders.

A clause ensuring that if the majority of shareholders decide to sell their shares, minority shareholders are forced to join the sale.

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

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

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.

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

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

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

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

Ownership interest in a company or property.

A fund structure that continually reinvests its profits instead of distributing them, effectively operating indefinitely.

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

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).

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

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

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

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

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

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

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

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

In a venture capital or private equity firm, the GP makes the investment decisions and takes an active role in managing invested capital and portfolio companies.

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

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

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

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

The minimum rate of return on an investment project required by a manager or investor. It's the minimum return necessary to make an investment decision.

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.

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.

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

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

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.

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

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

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

Acquisition of a company using a significant amount of borrowed funds to meet the cost of acquisition.

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

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

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

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

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

A transaction or event through which initial investors can cash out and exit their investment, typically through a merger, acquisition, or IPO.

A set period of time after an IPO during which shares cannot be sold by company insiders.

An investor in a venture capital or private equity fund, which provides capital but does not have a role in the fund's day-to-day operations.

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

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

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

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

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

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

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

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

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

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

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

MOIC measures the return on a particular investment, represented as a multiple of the original amount of money invested. It's calculated by dividing the current or exit value of an investment by the initial investment amount. A MOIC of 2x, for instance, would indicated that the investment has doubled in value.

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

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.

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

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

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.

A ratio that measures how much net profit a company earns per euro of revenue. It's computed by dividing net profit by total revenue and multiplying by 100 to get a percentage.

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

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

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

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

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

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

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

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.

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

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

A ratio used to compare a company's stock market value (price) to its book value (net asset value). A low P/B might indicate that a stock is undervalued.

This ratio compares a company's stock price to its earnings per share, helping investors understand how much they're paying for a company's earning power.

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.

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

Short for Property Technology, it's a sector that specialises in the use of technology to help individuals and companies research, buy, sell, and manage real estate.

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

A measure of a company's ability to pay off its short-term liabilities immediately. It's computed by subtracting inventories from current assets and then dividing by current liabilities.

A provision that ensures that the equity ownership of a given stakeholder does not fall below a certain percentage.

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

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

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

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

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

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

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

Digital platforms providing automated, algorithm-driven financial planning services with little to no human interaction.

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

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.

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

An agreement between an investor and a company that provides rights to the investor for future equity in the company.

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

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.

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

Transactions where existing shareholders (like early investors or employees) sell their stake in a company to new investors, often before a public offering or acquisition.

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

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.

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

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.

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

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

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

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

A legal entity that enables several investors to combine their funds and invest in a specific company.

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

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

A group of investors or organisations that pool their resources to participate together in a specific investment, like a startup deal.

A clause in an agreement that allows minority shareholders to join in when the majority shareholder sells their stake.

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

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

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

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.

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.

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.

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

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

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

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

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

In the context of venture capital and private equity, the vintage year refers to the year in which a specific fund began its investment activities. It's used as a reference point to compare the performance of various funds because those that started in the same year faced similar market conditions.

A derivative that gives the right, but not the obligation, to buy or sell a security at a specific price before expiration.

A hierarchy dictating the order in which distributions are made to limited partners (LPs) and general partners (GPs) in a private equity fund.

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

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