Fundraising and Equity Terms

Enterprise value is a widely used metric to evaluate a company's total value. It includes both the company's current assets and debts.

Equity is the most common financing approach, where a startup offers shares (percentages of ownership in the company) in exchange for cash, allowing them to raise capital for growth purposes. And a way of acquiring the money needed to scale the business is by selling shares, effectively selling ownership in the company, for cash.

Crowdfunding is the use of small amounts of capital from many individuals to finance a new business venture. It is a method of raising money used by startups and early-stage companies. Using social media and online investing platforms, the pool of investors is expanded beyond the traditional circle of owners, relatives, and venture capitalists.

The exercise period is a specific duration during which an option holder has the opportunity to convert their stock options into tangible shares by buying them at the predetermined strike price. It is a critical window that allows the option holder to take advantage of potential financial gains if the current market price of the company's stock exceeds the strike price.

It represents a contingency plan that can be executed by an investor, trader, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either has been met or exceeded.

In broad terms, the fair market value refers to the price of an asset on the free market. Ideally, fair market value should be an accurate estimation of the asset's worth. Tax law and the real estate market are two areas where you will find this term.

Family offices in the investment world are financial advisors and service providers that help individual investors or families looking to invest their money and protect the family's wealth for the next generation. Wealth advisers say family offices have the look and feel of a venture capital firm without the pressure coming from the demands of outside investors.

In general, a feedback loop is when a system’s output is taken into consideration and used as input. Specifically, in business, this can mean the idea of taking user and employee feedback into consideration to improve the product or work environment. The output from a process is taken into consideration and used as input to improve the next cycle.

In law, fiduciary refers to something that involves trust, in the relationship between the beneficiary and the nominee. In finance, the term refers to something whose value depends on its securities or the issuer's reputation. For example, paper money used to have a value in gold, but now the value rests on the institution that prints the money.

Financial Technology or FinTech focuses on the automation of financial services. It helps businesses manage their operations and processes by utilizing specialized software. Previously, FinTech mainly applied to large financial institutions, but it now also applies to smaller organizations, such as non-profits and education.