Seed
Seed Capital relates to the earliest stage of financing. It may be at the idea stage to fund the first version of a product, or to fund initial product development and commercialisation. Raisings tend to be smaller and carry high risk to investors.
Early Venture
Early Venture Capital (roughly, Series A) is an investment in a high-growth recently established business (a startup) that is used to accelerate growth. It is often the first institutional (professional investor) investment into the company. This stage is usually when a company has a product on market, and is demonstrating some level of traction with customers.
Growth Venture
Growth Venture capital (roughly, Series B-D) is an investment in a high-growth startup that is already generating significant levels of revenue and/or traction with customers. Usually, companies have raised one or more prior capital rounds with other professional investors. Capital raised is used to further accelerate growth and potentially enter new markets.
Later / Growth Equity
Later Stage rounds are capital raisings for advanced companies that are close to either an IPO (Initial Public Offering) or an acquisition. The company is usually generating substantial revenues and may be at or close to profitability. Growth is slower than earlier rounds, but still usually significant.
Public/Listed
Public or Listed Equity investors buy and sell shares in companies through public exchanges (e.g. NASDAQ, LSE, ASX)
Venture Debt
Venture Debt investors provide debt to early stage companies, usually in technology or biotechnology. This debt has a maturity date it upon which it must be repaid. It often carries both a fixed rate of interest and warrants (options converting into a portion of equity).
Debt
Debt investors provide a loan (or bond) for a certain period of time, at a given rate of interest. The money must be repaid at the end of the period, unlike equity, which usually has no maturity date. Debt must be repaid before equity. In some cases, a company will have multiple classes of debt. Senior debt refers to debt that ranks ahead of other classes of debt. Mezzanine or second lien ranks in between debt and equity.
Structured or Hybrid
Structured Capital investors provide capital that has characteristics in between senior debt and equity. Examples include debt plus warrants (similar to equity options), mezzanine debt (higher return, higher risk debt that is repaid after senior debt but before equity), and convertible notes (although for our purposes, notes that are automatically converted to equity are considered to be equity). Like senior debt, these structured instruments have a fixed maturity, some portion of fixed interest (although the interest may be accrued instead of paid in cash), and must be repaid in priority to equity holders in a sale or liquidation.
Special Situation
Distressed / Turnaround or Special Situations means investors that look for companies requiring an operational turnaround, that have capital structure issues, or other situations that ordinary investors would find challenging. Turnaround / special situations investors are usually very flexible and look for returns through both debt and equity structures
Company Buyout
Control or Buyout investors look to acquire 100% (or in some cases, a smaller number that is still a controlling majority) of the shares of a company.
Alternative Strategies
Alternative or Hedge Strategies refers to an umbrella of non-traditional investments including short-selling (betting a company share price will decline) and various forms of arbitrage.
Fund Investments
Fund Investments means investments in other funds. They are referred to as Limited Partners (LP's) in the fund they are invested in. LP's pay management and performance fees to the fund manager. They will sometimes co-invest with the fund manager on individual deals, investing directly in addition to their indirect investment through the fund.
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