Page 83 - ITI VC Guide V10

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Equity Funding Guide
by the share price of the latest financing.
PREFERENCE SHARES – Form of equity which has rights superior to ordinary shares. Most VC deals use preference shares which may convert to ordinary shares upon an IPO or Acquisition.
PRE-MONEY VALUATION – The value of the company before VCs cash goes into the business. VCs use the Pre-Money Valuation to determine what % ownership they will have in your company.
PRIVATE EQUITY – Private equities are equity securities of companies that have not “gone public” (in other words, companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange, any investor wishing to sell securities in private companies must find a buyer in the absence of a marketplace.
PROPRIETARY INFORMATION – Any information uniquely possessed by a company which is not generally available to the public.
PROSPECTUS – A formal written offer to sell securities that provides an investor with the necessary information to make an informed decision. A prospectus explains a proposed or existing business enterprise and must disclose any material risks and information according
to the securities laws. A prospectus must be filed with the SEC and be given to all potential investors. Companies offering securities,
mutual funds, and offerings of other investment companies (including Business Development Companies) are required to issue prospectuses describing their history, investment philosophy or objectives, risk factors and financial statements. Investors should carefully read them prior to investing.