A financing event where by venture capitalists invest in a company that was previously financed by founders and/or angels. The "A" is from Series "A" Preferred stock. See "B" round.

Source: ILPA

Defined by Rule 501 of Regulation D, an individual (i.e. non-corporate) "accredited investor" is either a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase OR a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year. For the complete definition of accredited investor, see the SEC website.

Source: ILPA

The recording of transactions as income is earned or expenses are incurred, rather than when income is received or expenses are paid (i.e., cash basis).

Source: GIPS

The interest due on preferred stock or a bond since the last interest payment was made.

Source: ILPA

The establishment of control in one business entity by another, often with the assistance of private equity. Third party acquisition is a common exit mechanism for private equity funds. The process of gaining control, possession or ownership of a private portfolio company by an operating company or conglomerate.

Source: ILPA

Capital provided to a company to finance its controlling interest in another entity for growth purposes.

Source: ILPA

The IRS approved method of calculating depreciation expense for tax purposes. Also known as Accelerated Depreciation.

Source: ILPA

A market in which transactions for an asset take place with sufficient frequency and volume to provide pricing information on an on-going basis.

Source: IPEV

A financial instrument traded in an Active Market. The necessary level of trading required to meet these criteria is a matter of judgment.

Source: IPEV

Risk measures included in a gips composite report or gips pooled fund report beyond those required to be presented.

Source: GIPS

The Adjusted Enterprise Value is the Enterprise Value adjusted for factors that a Market Participant would take into account, including but not limited to surplus assets, excess liabilities, contingencies and other relevant factors.

Source: IPEV

An adjustment condition occurs if the company does not close on an equity investment in the company for a minimum of $xxx, net of brokerage fees, on or before a series of other predetermined events, i.e. delivery of term sheet to preferred stockholders.

Source: ILPA

All fees other than transaction costs and the investment management fee. Administrative fees may include custody fees, accounting fees, auditing fees, consulting fees, legal fees, performance measurement fees, and other related fees.

Source: IPEV

A security issued by a U.S. bank in place of the foreign shares held in trust by that bank, thereby facilitating the trading of foreign shares in U.S. markets.

Source: ILPA

A committee of LPs within an individual fund delegated by the GP to give clearance and guidance on any situations involving a possible conflict of interest.

Source: ILPA

Assets for which the firm provides investment recommendations but has no control over implementation of investment decisions and no trading authority.

Source: GIPS

A market intermediary that assists in the structuring of a private equity transaction.

Source: ILPA

Under the AIFMD, an AIF (Alternative Investment Fund) is a ‘collective investment undertaking’ that is not otherwise subject to the UCITS (Undertakings for Collective Investment in Transferable Securities) regime, which raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors. Both open-ended and closed-ended vehicles and listed and unlisted vehicles can be AIFs for the purposes of the AIFMD. The definition captures a large breadth of vehicles that would be regarded as “funds”, including all non-UCITS investment funds, wherever established and regardless of their legal structure (including limited partnerships, limited liability partnerships and limited liability corporations). AIFs include hedge funds, private equity funds, retail investment funds, investment companies and real estate funds. Single investor vehicles are generally not viewed as AIFs as they would not be seen as collective investment undertakings. For the purpose of this Handbook, the term “AIFs” is used to refer to “private equity AIFs”.

Source: Invest EUROPE

Under the AIFMD, an AIFM is defined as an entity that provides, at a minimum, portfolio management and risk management services to one or more AIFs as its regular business irrespective of where the AIFs are located or what legal form the AIFM takes. The AIFM can either be an external manager appointed by or on behalf of the AIF, or the AIF itself (any delegate managing assets should not therefore be an AIFM). The Directive applies to:

• EU AIFMs managing one or more EU AIFs/non-EU AIFs (irrespective of whether or not they are marketed in the EU);


• Non-EU AIFMs managing one or more EU AIFs (irrespective of whether or not they are marketed in the EU);


• Non-EU AIFMs marketing EU AIFs/non-EU AIFs in the EU.

Source: Invest EUROPE

Invest EUROPE: The Alternative Investment Fund Managers Directive (AIFMD) is an EU Directive that took effect on 22 July 2013, subject to a one-year transitional period that expired on 22 July 2014. The AIFMD obliges managers falling within its scope to be authorised by their national competent authorities.

Esma: Alternative Investment Fund Managers Directive

Source: Invest EUROPE, Esma

Alternative Instrument Identifier

Source: esma

Alternative Investment Vehicle

Source: ILPA

A type of bundled fee that can include any combination of investment management fees, transaction costs, custody fees, and administrative fees. All-in fees are typically offered in certain jurisdictions where asset management, brokerage, and custody services are offered by the same company.

Source: GIPS

The amount of securities assigned to an investor, broker, or underwriter in an offering. An allocation can be equal to or less than the amount indicated by the investor during the subscription process depending on market demand for the securities.

Source: ILPA

This term describes non-traditional asset classes. They include private equity, venture capital, hedge funds and real estate. Alternative assets are generally more risky than traditional assets, but they should, in theory, generate higher returns for investors.

Source: ILPA

The institute governs the practice of public accountancy except for standards related to the audit of public companies, which are defined by the Public Company Accounting Oversight Board (PCAOB) http://www.aicpa.org

Source: ILPA

Anti-Money Laundering Task Force

Source: esma

An Accounting procedure that gradually reduces the book value of a tangible or a definite intangible asset through periodic charges to income.

Source: ILPA

A tax designed to prevent wealthy investors from using tax shelters to avoid income tax. The calculation of the AMT takes into account tax preference items.

Source: ILPA

Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.

Source: ILPA

Organizations, funds and networks formed for the specific purpose of facilitating angel investments in start-up companies.

Source: ILPA

A person who provides backing to very early-stage businesses or business concepts. Angel investors are typically entrepreneurs who have become wealthy, often in technology-related industries. A high net worth individual active in venture financing, typically participating at an early stage of growth. Also known as an informal investor.

Source: ILPA

A separate fund formed by the LPs of a fund to provide a pool of top-up capital when the reserves of the fund have proved inadequate, with the aim of avoiding the issues raised by cross-fund investing.

Source: ILPA

Contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price. [See Full Ratchet and weighted Average]

Source: ILPA

Accounting Regulatory Committee

Source: esma

Usually an outsider hired by a syndicate of angel investors to perform due diligence on investment opportunities and coordinate allotment of investment duties among members. Archangels typically have no financial commitment to the syndicate.

Source: ILPA

Loan, typically from a commercial bank, that is backed by asset collateral, often belonging to the entrepreneurial firm or the entrepreneur.

Source: ILPA

A company perceived to have poor management or poor economic performance is sometimes taken over by investors with the intent of breaking it up and selling all or part of its assets. Asset strippers look for companies whose composite parts are worth more than the current value of the company as a whole. Asset stripping goes much further than the process of restructuring which new owners can sometimes impose, as restructuring has the long-term goal of creating a healthy business. While uncontroversial when a company is seen as failing beyond rescue, when an apparently healthy company is the target, the process is much criticised, with investors accused of destroying a viable business for a fast profit. The term has acquired such negative connotations that few investors would use it to describe their own activities.

Source: europarl

The Attributable Enterprise Value is the Adjusted Enterprise Value attributable to the financial instruments held by the Fund and other financial instruments in the entity that rank alongside or beneath the highest-ranking instrument of the Fund.

Source: IPEV

Assets Under Management

Source: esma

Auditing Regulatory Committee

Source: esma

Immediate conversion of an investor's priority shares to ordinary shares at the time of a company's underwriting before an offering of its stock on an exchange.

Source: ILPA

The dollar value of total capital invested divided by the total number of investee firms in a given period.

Source: ILPA

The arithmetic mean of the internal rate of return.

Source: ILPA