Crowdfunding terms explained

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

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.

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

Money owed by a company to its creditors.

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.

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.

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

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.

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

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

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.

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

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

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

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 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.

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.

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

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

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

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

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

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

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

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

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.

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.

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

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.

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.

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.

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

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.

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

Ownership interest in a company or property.

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).

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

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

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

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.

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

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

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

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

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

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.

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.

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

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

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.

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

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

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.

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.

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

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 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.

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 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.

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

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

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.

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

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

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

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

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

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

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

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

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

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.

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.

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.

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

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

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

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.

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

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.

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

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.

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.

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

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

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.

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

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

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

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.

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.

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

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.

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.

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

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.

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

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

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

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

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.

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

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

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

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.

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.

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.