MSME & MTC Roadmap Glossary of Terms
A reference guide for technical terms in SME & MTC Roadmap Glossary of Terms, including key concepts and terminology
A
Accredited Investor
An individual or entity that meets specific financial criteria, allowing them to invest in private securities not registered with financial authorities.
Alpha
A measure of the active return on an investment compared to a market index.
Angel Investor
An individual who provides capital to startups in exchange for ownership equity or convertible debt.
Arbitrage
The simultaneous purchase and sale of an asset in different markets to profit from price differences.
Asset-Backed Security (ABS)
A financial security backed by a loan, lease, or receivables against assets other than real estate and mortgage-backed securities.
Asset Allocation
An investment strategy that aims to balance risk and reward by distributing investments across various asset categories.
B
Beta
A measure of a stock's volatility in relation to the overall market.
Bear Market
A financial market in which prices are falling or are expected to fall. It is characterized by pessimism, fear, and a lack of confidence among investors.
Blue Chip Stocks
Shares of large, well-established, and financially sound companies with a history of reliable performance.
Book Building
A process used during IPOs or other issuances to determine the price at which securities will be offered, based on demand from institutional investors.
Bridge Financing
Temporary funding used to meet short-term needs until long-term financing is secured.
Burn Rate
The rate at which a company consumes its capital, typically measured monthly
Bull Market
A financial market in which prices are rising or are expected to rise. It is characterized by investor confidence, optimism, and expectations that strong results will continue.
Bond
A fixed income instrument representing a loan made by an investor to a borrower.
C
Cap Table (Capitalization Table)
A table showing the ownership stakes, equity dilution, and value of equity in each round of investment in a company.
Carried Interest
The share of profits that fund managers receive as compensation, typically in private equity and hedge funds.
Capital Gain
The profit from the sale of an asset or investment.
Capital Loss
The loss incurred when an asset or investment is sold for less than its purchase price.
Cliff
A term in vesting schedules where a significant portion of benefits or shares become available after a specific period.
Convertible Debt
A type of financing where a loan can be converted into equity at a later stage.
Common Stock
Shares representing ownership in a company, entitling holders to vote on corporate matters and receive dividends.
Convertible Note
A short-term debt instrument that converts into equity, typically in conjunction with a future financing round.
Corporate Bond
A bond issued by a corporation to raise funding.
Commodities
Basic goods used in commerce that are interchangeable with other goods of the same type.
Collateral
An asset or property that a borrower offers to a lender as security for a loan.
Coupon Rate
The yield paid by a fixed-income security; a fixed percentage of the bond's face value.
Crowdfunding
Raising small amounts of money from a large number of people, typically via online platforms.
Credit Rating
An assessment of the creditworthiness of a borrower in general terms or concerning a particular debt or financial obligation.
Credit Default Swap (CDS)
A financial derivative that allows an investor to "swap" or offset their credit risk with that of another investor.
D
Day Trading
The practice of buying and selling financial instruments within the same trading day.
Debt Financing
Raising capital through borrowing, usually by issuing bonds or taking loans.
Derivatives
Financial securities whose value is dependent upon or derived from, an underlying asset or group of assets.
Deflation
A decrease in the general price level of goods and services.
Default
The failure to meet the legal obligations or conditions of a loan.
Dividend
A payment made by a corporation to its shareholders, usually as a distribution of profits.
Dilution
The reduction in existing shareholders' ownership percentages due to the issuance of new shares.
Dividend Yield
A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.
Diversification
A risk management strategy that mixes a wide variety of investments within a portfolio. Due Diligence: The process of thoroughly investigating a company’s financials, operations, and legal matters before making an investment.
Drag-Along Rights
Rights that allow majority shareholders to force minority shareholders to join in the sale of a company.
Down Round
A funding round in which the company’s valuation is lower than in previous rounds.
E
Earnings Per Share (EPS)
A company's profit divided by the outstanding shares of its common stock.
Equity
Ownership interest in a company, typically in the form of stocks or shares.
Equity Crowdfunding (ECF)
A method where many people invest small amounts of money in a business in exchange for shares.
Exit Strategy
A planned approach to selling ownership in a company to realize a return on investment.
Exchange-Traded Fund (ETF)
A type of investment fund and exchange-traded product, meaning it is traded on stock exchanges.
F
Face Value
The nominal value of a bond, share of stock, or other security as stated by the issuer.
Fair Market Value (FMV)
The price at which an asset would sell in the open market under normal conditions.
Forex (Foreign Exchange)
The global marketplace for buying and selling national currencies.
Fundamental Analysis
A method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial, and other qualitative and quantitative factors.
Futures
Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.
H
Hedge Fund
An investment fund that employs various strategies to earn active returns for its investors.
Hedging
A strategy used to offset potential losses in investments by taking an opposite position in a related asset.
Hockey Stick Growth
A pattern of rapid growth, typically seen in successful startups after an initial slow start.
I
Initial Coin Offering (ICO)
A fundraising method where a company raises capital by selling digital tokens.
Initial Public Offering (IPO)
The process by which a private company offers shares to the public for the first time.
Initial Margin
The percentage of the purchase price of securities that the investor must pay for with their own money when using a margin account.
Index Fund
A type of mutual fund designed to replicate the performance of a specific market index.
Inflation
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
Interest Rate
The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal.
J
Junk Bond
A high-yield, high-risk security, typically issued by a company seeking to raise capital quickly in order to finance a takeover.
L
Lead Investor
The main investor in a funding round, often responsible for negotiating terms and attracting other investors.
Leverage
The use of borrowed capital to increase the potential return of an investment.
Liquidity
The ease with which an asset can be converted into cash without affecting its market price.
Limit Order
An order to buy or sell a stock at a specific price or better.
Lead Time
The time between the initiation and completion of a process, such as raising funds or launching a product.
Lock-Up Period
A period following an IPO during which major shareholders are restricted from selling their shares.
M
Margin Account
A brokerage account in which the broker lends the customer cash to purchase securities.
Maturity Date
The date on which the principal amount of a bond is to be paid in full.
Market Capitalization
The total market value of a company’s outstanding shares, calculated as share price times the number of shares.
Market Order
An order to buy or sell a stock at the current market price.
Margin Call
A demand by a broker that an investor deposit additional money or securities into their account to bring it up to the minimum required level.
Maintenance Margin
The minimum account balance required to maintain an open position in a margin account.
Mezzanine Financing
: A hybrid of debt and equity financing, typically used to finance the expansion of existing companies.
Mutual Fund
An investment vehicle that pools money from many investors to purchase a diversified portfolio of securities.
Municipal Bond
A bond issued by a local government or territory, or their agencies.
Mortgage-Backed Security (MBS)
A type of asset-backed security that is secured by a collection of mortgages.
N
Non-Disclosure Agreement (NDA)
A legal contract to keep shared information confidential.
O
Option Pool
Shares set aside for future issuance to employees, advisors, and board members.
Options
Financial derivatives that give buyers the right, but not the obligation, to buy or sell an asset at a predetermined price at or before a specified date.
P
Post-Money Valuation
The valuation of a company immediately after new capital has been added from an investment round.
Position Trading
A trading strategy where the trader holds a position in a security for an extended period, often months or years.
Portfolio
A range of investments held by an individual or institution.
Private Equity (PE)
Investment funds that buy and restructure companies that are not publicly traded.
Pre-Money Valuation
The valuation of a company before new capital is added from an investment round.
Pro Rata Rights
The right of existing investors to participate in future funding rounds to maintain their ownership percentage.
Preferred Stock
A class of ownership in a company with a higher claim on assets and earnings than common stock.
Price-to-Earnings Ratio (P/E Ratio)
A valuation ratio of a company's current share price compared to its per-share earnings.
Principal
The face value of a bond or the amount of capital invested in a security.
R
Return on Investment (ROI)
A measure of the profitability of an investment, calculated as the net gain from the investment divided by the initial investment cost.
Risk Tolerance
An investor's ability and willingness to endure market volatility and potential financial loss.
Runway
The amount of time a company can operate before it runs out of cash.
S
Securities
Financial instruments that represent ownership positions, creditor relationships, or rights to ownership.
Seed Funding
Early-stage funding used to support the initial development of a startup.
Series A/B/C Funding
Subsequent rounds of funding that help a company grow and expand after seed funding.
Secondary Market
A market where investors buy and sell securities they already own, as opposed to buying directly from the issuing company.
Securitization
The process of pooling various types of contractual debt and selling the consolidated debt as bonds to investors.
Short Selling
The practice of selling securities or other financial instruments that are not currently owned, with the intention of buying them back at a lower price.
Sovereign Bond
A bond issued by a national government.
Stop-Limit Order
A combination of a stop order and a limit order to mitigate risk in trading.
Stop Order
An order to buy or sell a stock once the price reaches a specified level.
Subprime Loan
A type of loan offered at a rate above prime to individuals who do not qualify for prime rate loans.
Swing Trading
A trading strategy that involves holding securities for a short period, typically from a few days to several weeks.
T
Tag-Along Rights
Rights that allow minority shareholders to sell their shares on the same terms as majority shareholders in a sale.
Term Sheet
A non-binding agreement outlining the terms and conditions under which an investment will be made.
Technical Analysis
A trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
Treasury Bond
A government bond issued by the U.S. Department of the Treasury.
U
Unicorn Company
A privately held startup company valued at over $1 billion.
V
Valuation
The process of determining the current worth of a company or asset.
Venture Capital (VC)
A type of private equity focused on investing in startups and small businesses with high growth potential.
Vesting
The process by which an employee earns the right to receive stock options or other benefits over time.
Venture Debt
A type of debt financing provided to venture-backed companies by specialized banks or lenders.
Volatility
A statistical measure of the dispersion of returns for a given security or market index.
W
Warrant
A security that gives the holder the right to purchase company stock at a specific price before expiration.
Y
Yield
The income returns on an investment, such as the interest or dividends received.
Yield Curve
A graph that plots interest rates of bonds having equal credit quality but differing maturity dates.