Fundraising and Equity Terms

A share represents a unit of equity ownership in a company. Shares within a company can be owned by founders, people within the board of directors, executives, investors, and more. Investors exchange capital for shares when a financing round is launched.

The Share Fair Market Value is the currently accepted value of one share of a private company's common stock. It represents what the unit of stock would be worth on the open market.

The Nominal Value of a share is the share value assigned by the company to a unit of share when it is issued; it is also known as the “par value” or “face value” of the share.

The share price is the price of a single or several sellable equity shares of a company.

A shareholder, also known as a stakeholder, can be either a natural person or a legal person that holds stocks in a company. A shareholder owns a minimum of one share in a company or a mutual fund, making them a partial owner. There are two types of shareholders: common and preferred.

An SHA is an arrangement among shareholders that describes how a company should be operated, outlining shareholders’ rights and obligations. The agreement also includes information on the management of the company, the privileges and protections put in place for shareholders.

A Simple Agreement for Future Equity (SAFE) is a type of financial instrument used by startups to raise capital from investors. A SAFE is designed to provide a simplified and standardized way to secure early-stage investments without determining an immediate valuation for the company.

A sophisticated investor is an investor who is aware of the risks associated with investing in capital markets and has the adequate resources to bear those risks without exposing itself to excessive financial consequences.

A special purpose acquisition company (SPAC) has no commercial operations, formed strictly to raise capital through an initial public offering (IPO) for acquiring or merging with an existing company. This approach offers several advantages over a traditional IPO, such as providing access to capital even when market volatility and other conditions limit liquidity.

A Special Purpose Vehicle (SPV) is a separate legal entity created by an organization. The SPV is a company by itself, with its assets, liabilities, and its legal status. Usually, they are designed for a specific objective, enabling a company to legally isolate the risks and share them with other investors, securitize loans, and transfer assets.