Added Value
In the venture capital language, this is the increase in value generated by the management know-how and the support of the investment company.
   
Benchmark
Also "milestone"; prominent steps in the development of a company, and often an opportunity to make decisions such as e.g. a further capital supply.
   
Break-Even-Point
Indicates the volume of sales at which the revenues cover the fixed and running costs, i.e. at which a company operates without gains or losses.
   
Bridge Financing
Funds that are allocated to a company to prepare for stock listing with the particular goal of improving the equity ratio.
   
Burn-Out Turnaround
Also “restart”; drastic reorganization or restructuring of a company in economic troubles. Third party investors introduce new stock capital and thus dilute the interest of the previous shareholders.
   
Business Plan
Business plan of a company specifying and quantifying its goal and the means and ways to reach these goals. 
   
Buy Back
"Exit option "(Exit); the previous shareholders of a company buy back its shares. 
   
Capital Gain
Gains realized by the sale of company shares. 
   
Captive Fund
Indicates a fund that is part of or owned by a larger financial institution. Opposite: “independent fund”.
   
Carried Interest
Participation of the management company and its manager in the profit of the managed funds, e.g. 20% for the management company and 80% for the investors. In general, there is a “hurdle rate”.
   
Case Scenarios
Within the examination of a potential investment, various case studies are carried out:
a “pessimistic case scenario” for an adverse development, an “optimistic case scenario” for a favorable development, and a “most likely scenario” for the development that is considered to be most likely. 
   
Cash Flow Deals
Traditional form of MBO that is largely financed by the earned liquid assets of a company. Key figure is the cash flow that provides the financing of a buy-out. 
   
Corporate Venturing
Venture capital financing by industrial companies or their own venture capital companies that focus on the strategic interest of the group.
   
Co-Venturing
Joint investment in a company by several investors, one as lead investor. “Syndication”.
   
Deal Flow
Investment opportunities offered to a venture capital company.
   
Development Capital
Capital to finance the business development of mature, mid-sized companies. “Expansion financing”.
 
Due Diligence
Detailed review and evaluation of a potential target company as a basis for the investment decision.
 
Early Stage Financing
Financing of the early phase in the development of a company, ranging from the financing of the concept to the start of production and marketing.
 
Equity Kicker
Opportunity offered to outside capital providers to acquire an interest in the financed company at special conditions.
 
Exit
Exit of an investor by selling his interest, either by a “buy back”, a “trade sale”, a “secondary purchase” or by “going public”. 
 
Expansion Financing
Financing of the growth and expansion of a company. The company has reached the break-even point or is making profit. The funds are used to finance additional production capacity, diversification, market expansion and the like. 
 
Fundraising
Capital raise in a “fund”. Early stage of a venture capital fund; private, industrial or institutional investors are canvassed to subscribe for shares in the fund. 
 
Hands off
After the initial supply of equity, a company operates without direct intervention until the exit. The investors passively support the company by participating in the board of directors, advisory bodies etc.
 
Hands on
Active support. The investors aims at a value increase by actively supporting the management etc. “Added Value” (added value is realized by activities that exceed the participation in advisory boars, the board of directors etc.).
 
Hurdle Rate
Prior to the profit participation of the management company and its management (carried interest), the investors draw a base payment.
 
Independent Fund
Independent fund or VC company that is not controlled by a group. Opposite: “captive fund”.
 
IPO
Initial Public Offering: In the English speaking countries the term used for the first emission of shares of a share corporation.
 
IRR
Internal rate of return: mathematical method to calculate the yield return of an investment.
 
Later Stage Financing
Late phase financing: Financing of the expansion and capacity increase of and takeovers by established mid-sized companies.
 
Lead Investor
In a syndicate, the investor with the largest share who assumes the organization of the financement as well as the hands-on support.
 
LBO Leveraged Buy-Out
Takeover of a company largely financed through debt funds.
 
MBI Management Buy-In
Takeover of a company by its management.
 
Pay Back
Amount invested plus “capital gain”, realized at the time of exit.
 
Private Equity
Investment capital for later phases in the development of a company. In a wider sense, private equity is a generic term used for pre-IPO capital, usually invested in larger quantities than “venture capital”. As opposed to “venture capital”, private equity may often hold a majority interest in the portfolio companies. 
 
Pre IPO
The phase immediately before the company is listed
 
Ratchet Sliding Scale
Bonus malus agreement under which equity shares may be acquired at conditions favorable to the seller (bonus) or the buyer (malus).
 
Replacement Capital
Purchase of the interest of shareholders seeking to leave the company.
 
Restart Turnaround
If a company is in a poor economic situation, a new corporate concept may be prepare; possibly, the company is restarted with a new management and a new product range
 
ROI Return on Investment, IRR
Return generated by payouts and the sale of shares.
 
Second Round Financing
A second financing round for a company that has, in a first round, already obtained “venture capital”.
 
Secondary Purchase
Exit option: a VC company sells its shares in a company to another VC company or a financially interested partner.
 
Seed Capital
Financing of the development and implementation of an idea into realizable results and into a prototype. This idea is the basis for a business concept of the company to be founded.
 
Share Deal
Company acquisition by the purchase of its shares.
 
Spinn-Off
Foundation financing: the company is in the process of being founded, in its starting phase or already in business and has not yet or not sufficiently marketed its products.
 
Syndication
Co-investments: to finance larger investments with a higher risk, several investing “venture capital” companies act together.
 
Trade Sale
Sale of company shares to an industrial investor.
 
Turnaround Financing
Financing of a company that should, after successfully overcoming a difficult phase, should progress again.
 
Venture Capital
Investment capital for promising companies that invest in innovative technology; typically a minority investment. VC is a case of private equity.