Bridge Financing
Funds which are made available to an enterprise to prepare for an initial public offering, especially to improve the company’s equity ratio.

Business Angel
Wealthy private individuals who finance research or inventions.

Business Plan
A company’s plan in which its intentions, its goals and the means to achieve them are listed and quantified.

Buy Back
An exit variant. The existing shareholders buy back the shares.

Carried Interest (“Carry”)
The profit sharing of the management company and its managers in the success of the investors’ funds it manages.

Co-Venturing
Investment in a company by several investors of whom one acts as a lead investor

Divestment during IPO
The sale of shares during the initial public offering.

Divestment after IPO
The sale of shares during a second or later issue of shares on the stock exchange.

Divestment through write-off
Identical with total loss.

Due Diligence
Detailed investigation, scrutiny and evaluation of a possible investment in a company. It is the basis of the decision to invest.

Early Stage Financing
Financing the early development of a company, starting with the financing of the concept to the beginning of production and marketing.

Exit
An investor divests his investment by selling his share; exit possibilities: buy back, trade sale, secondary purchase, going public.

Expansion Financing
The enterprise has reached the break-even point or is making a profit. The funds are used to finance additional production capacity, product diversification or for market expansion and/or is used for additional “working capital”.

Going Public
Introducing the company on the stock exchange.

Hands On
Active supervision - the investor’s aim is value enhancement by actively supporting the management (activities that go beyond participating in advisory boards, supervisory boards etc.)

Hurdle Rate (“Hurdle”)
Interest calculation for the investors. Once it is overcome the management’s profit-sharing (“Carry”) accrues.

IPO (“Initial Public Offering”)
Term for the first public issue of shares of young and medium-sized companies on the stock exchange.

Later Stage Financing
The financing of expansions, take-overs etc. for established medium-sized companies.

LBO (“Leveraged Buy-Out”)
Company take-overs generally using outside capital.

Lead Investor
The investor in a syndicate of VC companies who usually has the largest share, who also organises the financing and takes care of the hands-on supervision.

MBI (“Management Buy-In”)
The take-over of a company by external management.

MBO (“Management Buy-Out”)
Take-over of company by the company’s management.

Pre-IPO
The phase of a company directly before its stock market flotation.

Private Equity
A later phase in financing a company until directly before the stock market flotation.

Second Round Financing
A second round of financing for a company which in a first round has already received venture capital or private equity.

Secondary Purchase
A venture capital or private equity company sells its shares in an investment management company to another venture capital or private equity company or to a financial investor.

Seed Capital
Financing the maturation and realisation of an idea until something marketable is created. The final step is to produce a prototype. The prototype forms the basis of a business concept for a company.

Spin-off
A department or division of a company breaking off from the company or becoming independent.

Start-up Financing
The company is in its foundation phase, is setting up or has just recently started doing business and has not marketed its products yet or has not done so to a great degree.

Track Record
The history of the success and the experience of an investment company or of an enterprise and its management.

Trade Sale
The sale of the company’s shares to an industrial or strategic investor.

Turnaround Financing
Financing a company which – after overcoming difficulties through recapitalisation – is to develop positively.

Venture Capital
Investments which are aimed at the early phase of company’s development – particularly the so-called early stage area. Generally the term venture capital is used, but this can also include private equity.