- is a form of private equity financing that is provided by firms or funds to startup, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth

is generally used to support startups and other businesses with the potential for substantial and rapid growth.

- is an investor that provides capital to new businesses, typically startups with high growth potential, in exchange for an equity stake.

the investor will receive an equity stake in the business in the form of _. 

Young companies to raise venture capital require a combination

of :

: Investors provide capital in exchange for ownership shares in the company, allowing them to participate in the company's success.

: This involves providing funds to the company with specific conditions, often tied to performance metrics or milestones.

: which are debt instruments with fixed interest rates and specified repayment terms.

: Hybrid instruments that combine features of both equity and debt, offering flexibility in terms of returns and conversion options

deal, offering investors the option to convert their investment into equity after a predefined period or when certain financial targets are met.

: A financial instrument that pays interest based on the company's income, providing a return to investors without an ownership stake.

In addition to equity, the startup issues income notes, promising investors a percentage of the company's profits as interest payments, enhancing their potential returns.

" refers to entities that make investments, typically institutions or funds, with the goal of acquiring and managing assets to generate returns.

" refers to entities that facilitate the sale of financial instruments, acting as intermediaries between buyers and sellers.

are investment pools set up to provide retirement income to employees.

Employers and employees contribute to these funds during an individual's working years, and the funds are managed to grow over time, generating returns that can support retirees.

are funds that universities maintain to support their long-term financial stability. These endowments are typically invested, and the returns generated contribute to funding various university activities, such as scholarships, research, and infrastructure development.

are funds that colleges and universities receive from organizational and individual donors.

is a pool of money that is invested in stocks and other assets.

funds are actively managed by professional managers who buy and sell certain investments

is a pool of money that takes both short and long positions,

aims to deliver more immediate results and may adjust its portfolio more frequently based on market conditions.

is when a private company sells shares of its stock for the first time to the public and becomes a public company.

is the process of restructuring a company's debt and equity mixture, often to stabilize a company's capital structure.

occurs when two separate entities combine forces to create a new, joint organization.

refers to the takeover of one entity by another

- is debt which ranks after other debts if a company falls into liquidation or bankruptcy.

is riskier than unsubordinated debt. It can be any loan that's paid after other corporate debts and loans are repaid.

-  are high-yield bonds that credit-rating agencies have deemed either below investment grade

- Sometimes dubbed subordinated debt, it is a hybrid of debt and equity that isn't fully backed by the value of a company's assets, it is instead backed by the value of the enterprise based on its cash flows.

debt ranks below senior debt in terms of priority for repayment.

- a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches

are often backed by corporate loans with low credit ratings or loans taken out by private equity firms to conduct leveraged buyouts.

a business that is formed that has no actual business operations. They are mostly created for money laundering or sometimes for parking early startup funds.

" refers to the borrowed funds that a company secures to finance the acquisition of another company or its assets.

- a metric used in financial analysis to estimate the profitability of potential investments.

it is the expected compound annual rate of return that will be earned on a project or investment.

return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property.

return only measures the return on the actual cash invested out of pocket.

is cumulative and typically measures returns based on including the eventual sale price.

is the basic unit of ownership

It does not carry any special rights outside of those described in the company charter and bylaws.

It gives the holder ownership, but that ownership is subordinated to

stands behind all of those other stakeholders before getting the residual value, that is, what's left after all other obligations are satisfied.

has a liquidation preference over common stock:

that is, in the event of sale or liquidation of the company, the _ gets paid ahead of the common stock.

, which is the amount that gets paid to the preferred stock before moving on to paying the common stock.

in a private equity transaction is the cost basis the venture capitalist pays for the stock.

sometimes called "straight preferred,"

is preferred stock that has no convertibility into equity.

Its intrinsic value is therefore its face value plus any dividend rights it carries.

In most ways it behaves in a capital structure like deeply subordinated debt.

always carries a negotiated term specifying when it must be redeemed by the company-typically, the sooner of a public offering or five to eight years.

It is used in private equity transactions in combination with common stock or warrants.

is preferred stock that can be converted at the shareholder's option into common stock.

This forces the shareholder to choose whether he will take his returns through the liquidation feature or through the underlying common equity position.

allows the entrepreneur to "catch up" to the investor after the investor's initial investment is secured.

is convertible preferred stock with the additional feature that in the event of a sale or liquidation of the company the holder has a right to receive the face value and the equity participation as if the stock were converted

Like a convertible preferred, these instruments carry a mandatory conversion term triggered on a public offering

The net result is an instrument that acts like the redeemable preferred structure while the company is private and converts to common on a public offering.

It holds that an entrepreneur's stock does not become his or her own until he or she has been with the company for a period of time, or until some value accretion event occurs

also performs the function of returning shares to the incentive stock pool from employees who in some sense "haven't finished the job," thereby providing incentive stock for their replacements

protects morale by assuring employees that those who leave will not benefit as much as those who stay behind and create value.

Maybe the most basic way venture capitalists protect their investments is through _ provisions.

are contractual agreements between the investor and the company and fall into two broad categories:

two broad categories of covenants:

are the list of things the company agrees to do.

They include such things as producing audited reports, holding regular board meetings and paying taxes on time.

are coupled with supermajority voting provisions wherein the company agrees not to do certain things unless a greater than 50% majority of shareholders (or in some cases, the board) agrees.