|
AVCAL |
Australian Venture Capital Association - industry body for
Australian VC's. |
| Business Angel |
A private investor who contributes money and experience to
early stage investments. |
| Channel Partner |
A company's distributors and resellers. |
| Confidentiality Agreement |
See NDA. |
| Convertible Note |
A short term debt investment instrument. Typically used when
it is difficult or inappropriate to agree agreed valuation.
Pricing may be set in reference to the next professional
round e.g. a 10% discount to the next round or may be fixed
at the time of the investment. The type of security that
note converts into is also agreed ahead of time. |
| Dilution |
The reduction in the percentage size of one's shareholding
through the issue of new capital. |
| Due Diligence |
The process whereby an investor investigates the
attractiveness of an opportunity, assesses the quality of
the management team, and assesses the key risks associated
with an opportunity. Due diligence starts on initial
inspection of an opportunity and ends when an investment is
completed. |
| ESOP |
Employee Share Option Plan. The term sheet will typically
stipulate the upper limit on the size of the option pool
expressed as a percentage of the issued capital, typically
10% to 20%. These options will be used to attract key hires,
retain and motivate staff. |
| Exclusivity Period |
An agreement whereby a company agrees to give an investor
the first right of refusal on an investment for an agreed
period of time. An exclusivity period is a requirement of
TVP term sheets to protect our investment in time and
opportunity cost in closely examining an opportunity. |
| Information Memorandum |
A document prepared for potential investors, outlining the
business and investment opportunity. |
| Intermediary |
Individuals or organizations that introduce deals,
frequently working with organizations to assist them in
preparing their business plans and refining their
strategies. |
| Investment Syndicate |
VC's may co-invest to diversify their risk and to
reduce the future funding risk of a business. TVP will
consider co-investing with professional investors and
business angels. |
| IPO |
Initial Public Offering, floating a stock on a stock
exchange. |
| ICM |
Information, communication and new media: a descriptor for
a segment of the high technology sector. |
| Legals |
The process of converting a mutually agreed term sheet into
formal documentation typically a shareholders agreement, a
subscription agreement, service contracts and warranties. |
| Milestone |
A business event that indicates progress towards successful
execution of a business plan. |
| NDA |
Non-Disclosure Agreement. A statement formally acknowledging
that the confidence of information provided in private will
be respected. The use of these documents is declining due to
difficulty and impracticality of enforcement in an
environment where VC's routinely see many very similar
business opportunities. |
| Term Sheet |
A non-binding letter of offer to invest, subject to due diligence, which
stipulates the terms and conditions the investor is
proposing including valuation, board positions, conditions
precedent, minority protection rights, etc. |
| Tranching |
An arrangement whereby the investment capital is split into
a number of stages with the size of tranche and valuation
pre-agreed. Investment of subsequent tranches are subject to
attainment of agreed milestones. |
| TVP |
Technology Venture Partners |
| Warranties |
A series of legal statements whereby the principals of the
investee company attest to the accuracy and completeness of
the information provided during the due diligence process. |
