• The difference between an asset’s purchase price and selling price, when the selling price is greater. Long-term capital gains (on assets held for a year or longer) are taxed at a lower rate than ordinary income.³
• Capital Gain is the gain to investor from selling a stock, bond or mutual fund at a higher price than the purchase price. The capital gain is usually the amount realized (net sales price) less your investment (adjusted tax basis) in the property. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.⁵

The amount of capital available to a angel or VC Fund’s management team for startup venture investments.⁶

Financial capital is a term that can refer to the money exchanged between entrepreneurs and investors during a business deal. Entrepreneurs need to raise capital for their startups while investors can provide them with the needed capital (or funding). Financial capital usually comes with interest, and new business owners can use their financial capital in purchasing real capital (or machinery or equipment) for their new business.⁴

The right to buy a security at a given price (or range) within a specific time period.³

Compound Annual Growth Rate.

A document utilized by management and relied upon heavily by some investors, that entrepreneurs use in detailing their business concept as well as their company’s overall strategic and financial objectives. In recent years the Business Model Canvas has become increasingly popular with both entrepreneurs and managers as a guide or framework for the startup’s efforts, and in many cases is now utilized in lieu of the Business Plan by these parties.⁶

The legal principle that assumes the board of directors is acting in the best interests of the shareholders unless it can be clearly established that it is not. If the board was found to violate the business judgment rule, it would be in violation of its fiduciary duties to the shareholders.³

(BDC) A vehicle established by Congress to allow smaller, retail investors to participate in and benefit from investing in small private businesses as well as the revitalization of larger private companies.³

The rate at which a company expends net cash over a certain period, usually a month.³

AKA. Burn Out – Extraordinary dilution, by reason of a round of financing, of a non-participating investor’s percentage ownership in the issuer.³