30/07/2010

By Michelle Williams, AngelNews

I hope you found our breakdown of basic entrepreneur and investment terms useful in our last issue. This month we have chosen a wider mixture of industry jargon for you to brush up on. Happy reading!

"A" Round*

A financing event whereby venture capitalists invest in a company that was previously financed by founders and/or angels.

Administration

A procedure defined in the UK by the Insolvency Act 1986, providing a possible alternative to the liquidation or receivership of a company. Once an administration order is granted by a court, the claims of all creditors are frozen, giving the company protection against its creditors. The administrator then runs the company.

AER

Interest calculated under the assumption that interest is paid and compounded per year.

APR

Annual Percentage Rate. The rate of interest calculated by a set formula, to give a "true" rate of interest on a loan. All companies offering loans to the public are obliged to quote the APR on the loans or credit they are offering.

BBAA

The British Business Angel Association (BBAA) is the trade association dedicated to promoting angel investing and supporting early stage investment in the UK. The BBAA works to create an eco-system to promote and support the early stage investment market, providing a forum for these groups to integrate and share good practice on new developments and trends in early stage investing, development o f new services and tools to support the investment process. BBAA also acts as a voice to Government, stakeholders, business and the media to promote the interests and needs of the angel and early stage investment industry. Website: www.bbaa.org.uk

Business Plan

A plan written by the management of the company (often with the assistance of their advisers), usually for the purpose of raising capital, describing how the capital will be used to develop the business.

Deal Flow

The number of investment opportunities which an investor receives each year.

Dividends

Once a company is profitable is it able to declare that some or all of these profits should be paid out to its shareholders. Such payments are known as dividends.

Flotation

When a company begins trading its shares on a stock exchange.

FSA

The Financial Services Authority, the immensely powerful UK regulator of the financial services industry. Often referred to as "the Regulator".

Holding Company

A company which holds (ie owns) a number of subsidiary, usually trading, companies. Quoted PLCs are usually holding companies.

Indemnities

The promise that if warranties (qv) made by a warrantor are proved to be false then compensation will be paid to the people to whom the warranty has been addressed.

Living Dead

An investment which is not going well, but which is managing to survive.


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