Important Terms in Venture Capital

Those interested in venture capital are expected to familiarize themselves with some venture capital terms. These terms include:
Accredited investor– This is an investor with a special status under financial regulation laws
Angel investor– this is an officially recognized investor who use their finances to invest in a startup. Unlike large VCs, they work in small groups or even alone. They are mostly interested in the startup in the earliest stage.
Benchmark- this is the measure used to determine whether a start-up qualifies for more investment money. This is done by determining whether the startup has met its performance goals.
Cash position- this is the sum of the cash at hand and the assets referred to as highly liquid. (Short-term Debentures, CDs, among others)
General partner- this is a partner whose role is to oversee the day- to- day running of the VC firm. They are also referred to as managing partners.
Limited partner- Limited partners are those partners whose role is to invest their finances in the VC fund. They are not involved in the day-to-day running of the firm.
Merger- mergers occurs when two companies consolidate into one company for a given purpose, which may include obtaining a large market share, acquiring some given technology, among others.
ROI-Return on Investment- this is the ratio of some funds invested in a given project to the amount realized from the project (gain or loss)


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