Glossary

A

Asset: An asset is considered an investment when it belongs to an individual, and is therefore counted as part of its assets. However, an asset commits financially to its owner and is not immune to risks.

Some examples of assets:

Real estate securities (stocks, bonds, warrants, etc.)

Negotiable debt securities

Receivables.

B

Business Angel: The Business Angel is an investor providing capital to start-up companies (the "start-up"), the most risky phase of investment. He is also personally involved in the company; this differentiates the Business Angel from crowdfunding. It is generally a wealthy person with experience in entrepreneurship, industry or investment. Here are the 3 typical profiles of a Business Angel:

1. The former entrepreneur (or senior manager) who, having accumulated a certain amount of assets, is able to invest between € 5,000 and € 200,000 per year (most common case);

2. The entrepreneur who created and then resold his business recently and who is able to invest between 50000 € and 500000 € per year.

3. The member of a family office.

Business Angel Network: The Business Angel Network is a Business Angel group that combines their expertise, their professional network and their investment opportunities.

Business plan: The business plan is a written document providing for the financial budget of a company's next few years, its internal contingencies and innovations and other sectoral events. It serves to seduce potential future investors of a company.

C

Capitalization table: The capitalization table of a company corresponds to the list of all the shareholders of the company and their percentage of ownership, calculated on a fully diluted basis.

Cash Burn: Cash burn is the amount of a company's expenses at a given time. Example: The cash burn of this start up was 500,000 € last month

Convertible bond: A company issues a bond loan, consisting of debt securities (known as bonds) of a defined amount (nominal value), subscribed by the investors at a specified price (known as the subscription price). Example: the company issues a € 5.6 million bond loan consisting of 1,984 bonds with a nominal value of € 2,800 subscribed by investors at a subscription price of € 2,520. The subscriber will have paid € 2,520 for a bond that will be refunded € 2,800, ie a discount at the subscription of € 280.

The loan may be remunerated by an interest rate (coupon) paid regularly or at maturity. Example: € 5.6 million bond loan is paid by a coupon of 5% of the nominal value per year, starting from 1 April 2016 and paid in full at the time of redemption

The loan is repaid in securities, at term or in advance if certain defined events occur. Example: the company will repay each investor in cash at maturity within 2 years or may proceed to an early redemption in shares and warrants in the event of IPO. Repayment at maturity or early will trigger the payment of a reimbursement premium set in advance.

Crowdfunding: Crowdfunding is the principle of raising funds for developing companies from private investors and / or professional investors. There are 3 types of crowdfunding:

  1. The gift / gift with counterpart (one thanks its donors by a material or immaterial advantage)
  2. Lending (or ready)
  3. Equity crowdfunding (investors become shareholders)

D

Debt: Debt is money from one person / one company to another. The borrower must repay the money at a later date and pay interest to the creditor. A liquidation proceeding can be initiated against a company with unpaid debts.

Dilution: Dilution is a reduction in ownership of the percentage of the capital of a company following the issuance of new shares. Example: After a capital increase, an investor will have a lower percentage than he had before this capital increase, as other shares will have been created

Diversification: Diversification is an investment strategy that consists of mixing the amounts, values and types of investments in a portfolio in order to minimize losses. Example: A particular investor has invested in different sectors (aviation, biotech, hotel ...) in order to minimize the losses in case of major crises in one of these sectors.

Dividend: A dividend is a part of a company's earnings distribution to its shareholders.

E

Equity: These are shares or other types of financial instruments that represent a shareholding in a company

Equity crowdfunding: Type of crowdfunding through which several individual investors can buy shares of a company, usually through an online procedure.

Exit: The exit is an event during the life of the company allowing the shareholders to sell their shares. Example: an IPO or the sale of the company to an industrialist.

F

Forced transfer: A forced sale is an obligation established in the shareholders' agreement of the company, used by the majority shareholders to force the minority shareholders to join the sale of the company under the same conditions as the latter.

Family office: A family office is a company that manages the private wealth of a wealthy family. She also advises clients on their investments. Family offices are closed circles and they invest in a wide range of financial assets.

Fully Diluted: A fully diluted is a grouping of all the shares of a company and all the unexercised financial instruments that will give access to the capital of the company in the future

Financial Portfolio: A financial portfolio is a grouping of shares, bonds and other financial instruments held by an individual.

Financial asset : Generally transferable and / or negotiable, a financial asset is a security or contract that can generate income or capital gains to its owner.

G

Growth Phase: The growth phase is the phase of a company when it has passed the seed phase and has established a proof of concept

H

HNWI: The High Net Worth Individual (HNWI) is a term used by American bankers that refers to persons whose non-principal inheritance is between $ 1M and $ 5M. In the United Kingdom, a person with an annual income of at least £ 100,000 and / or a minimum value of $ 250,000 is eligible under the HNWI criteria.

I

IPO: An Initial Public Offering (IPO) is a financial transaction allowing a company to list its shares on a stock exchange (on Euronext or Alternext in France). The price of one share at the IPO is fixed by the board of directors of the company. 2 types of shares are offered to investors:

  • New shares resulting from a capital increase, therefore new liquidity for the company (cash in); 2
  • . Or existing shares sold by a historical shareholder, without any cash inflows.

Information Memorandum: The Information Memorandum is a confidential document of a company that gathers all the essential data on:

  • Production
  • Its commercial strategy
  • Competitors
  • Partners
  • Its development prospects
  • Its financial elements (in the form of Business Plan)
  • Funding requirements.

This document is intended primarily for investors with an interest in investing in this company.

J

Joint Assignment: A joint assignment is a contractual obligation which gives minority shareholders the right to join the proposed transaction to the majority shareholders on the same terms as the latter.

K

Know Your Client (KYC): The KYC is a mandatory regulatory procedure that financial services companies and certain other companies must perform to verify the identity of their client in the fight against money laundering and the financing of Terrorism, or other illicit activities

L

Lock-Up: Lock-Up is a period during which the investor can not withdraw funds. Example: At an IPO, a historical investor agrees to take shares in a company that will be listed on the stock exchange; It undertakes to retain its newly acquired shares at the IPO for a previously defined period (generally, this period never exceeds 9 months).

O

OCABSA: OCABSA is the acronym for Bonds Convertible into Shares with Warrants for Shares.

Ordinary Share: An ordinary share is an action that gives the shareholder classical rights, such as the right to vote or the collection of dividends.

Option: The option is a right to the owner of the latter to buy or sell shares of a company at a fixed price and period. There are two categories of options:

1. Calls, or call options.

2. Puts, or put options

P

Priming phase: The priming phase is the initial phase of a company, which seeks to create a viable product / service and establish proof of concept.

Post-Investment: The post-investment period is the period after an investment in a company.

Pre-emption: The pre-emption clause allows a class of shareholders (or all shareholders) to acquire shares for sale as a priority. This clause meets the desire of the existing partners to increase their participation in the company or to control the evolution of the capital. The distribution of the pre-empted shares may be decided by the board of directors, the chairman, or any other person designated by the persons concerned.

Preferred share: A preferred share is an action that offers privileges to its owner (unlike the ordinary share, which confers only classical rights on the shareholder). The preferential share also allows voting rights greater than the ordinary shares and / or a preferential allocation right on the liquidation bonus

R

Risk: The risk is the possibility of losing, partially or entirely, its investment. The main risk of investing in equities is to lose all of its investment. An investor must take into account this risk related to the uncertainties that could affect the value of the shares in the market

S

Share: A share is a title issued by a business to an individual or a company, for the purpose of financing a project. It allows the holder to become a shareholder, ie owns part of the capital, and thus confers the rights associated with it (voting rights, dividend ...). All shareholders are the shareholders.

Subscription form: The subscription form is an agreement between the company and the investor concerning the purchase of shares of the company. It details the respective rights and duties of the company and the shareholder

T

Term sheet: The term sheet is a short document synthesizing the terms and conditions of the investment transaction. It is a non-binding agreement that serves as a model for the future legal documents of the operation. A contract will then be established on these bases once the different parties have agreed on the different points of the term sheet.

True Shareholder: A true shareholder is an investor with economic value and other rights attached to the shares (dividends, voting rights, tax benefits, etc.), but whose shares are held by another person or company for tax purposes or administrative.

V

Valuation: The valuation of a company is determined by considering quantitative aspects (what quantity of production?) And qualitative aspects (what is the quality of the product / service?).

Venture Capital: The venture capital consists of all the financial institutions dedicated to financing innovative start-ups and SMEs of growth: it is therefore a large area of Private Equity. The players concerned can be funds dedicated to Venture Capital, trusts and family offices. Ventures capitalists often have motivations that differ according to their profile and the stage of development of the company. But in a general way we can distinguish the players who hope for a return by providing only the funds without worrying about management, i.e. a hands-off approach; Actors who practice a more proactive approach by becoming involved in the life and management of the company (often in the start-up phase or in the restructuring phase), ie a hands-on approach.