Venture Capital Concepts, Part 4

What is a "Lock up Period?"
* Most often used in an IPO, it is the predetermined period of time an investor must wait before an investor can liquidate their stock.

What is a "Master Limited Partnership" (MLP)?
* A publically traded limited partnership with the benefit of publically traded market liquidity.

What is "Management Buy-In" (MBI)?
* The purchase of a business by team of outside managers with the financial backing to take over the company.

What is a "Minority Enterprise Small Business Investment Companies" (MESBICS)?
* Government chartered venture capital firms that only invest in minority owned (51% or more) businesses.

What is an "Owner Employee?"
* A sole proprietor of a business who owns at least 20 percent of the business' capital and earns profits from the business.

What is a "Private Investment in Public Equity" (PIPE)?
* When a mutual fund or private investment buys common stock at a discount to the currently offered price for a company.

What is a "Pipeline?"
* Pipeline is the flow of upcoming underwriting deals. Used to describe the flow of upcoming deals requiring underwriting.

What is a "Pitch?"
* The sales process, including the verbal and written materials, designed to persuade someone to buy a product or service.

What is a "Portfolio Company?"
* An individual or all of the companies in which a venture capital firm invests.

What is "Private Equity?"
* Private equities are stock ownership in a company in a non-publically traded company. These securities are generally very illiquid.

What is a "Private Limited Partnership?"
* A limited partnership that avoids regulation by the SEC because it has less than 35 limited partners.

What is a "Private Placement?"
* A term for a private investment in a publically held company. The acronym is often called for this is "PIPE." PIPEs are not monitored by the SEC because no public offering is involved.

What is "Raising Capital?"
* Obtaining money from individual investors or venture capital investors.

What is "Recapitalization?"
* Financing technique used by a company whereby it restructures its debt and equity without affecting its total amount of balance sheet equity in efforts to discourage a hostile takeover.

What is "Resyndication Limited Partnership?"
* A limited partnership in which the original limited partners sell existing properties to a new set of limited partners enabling the new limited partners can receive tax benefits the original limited partners can no longer receive.

What is "Risk" in financial terms?
* The statistical probability of a gain or loss from an investment. Risk is calculated by using the historical probability of past events.

What is "Venture Capital Risk Capital?"
* Funds made available to a small business or a start up company that have high growth potential.

What is "Return on Investment" (ROI)?
* The profit or loss from an investment expressed as an annual percentage rate (APR). Calculated by dividing profit or loss by total invested.

What is "Round of Funding?"
* The stage of financing a company is in when receiving funding. For example a company can progress from first round, second round, third round, mezzanine, to preIPO.

Dr. Brent Lundell owns, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services. See the group website at or contact them for additional information at 800-335-9269.

Share Article

Sponsored Links

Related Articles