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• Accordion Feature

  A provision in a private equity or venture capital fund's limited partnership agreement that allows the fund to accept additional capital from existing investors. It is an option that a company can buy that gives it the right to increase its line of credit with a lender; usually in the anticipation of the need for more working capital for possible expansion opportunities.

• Accredited Investor

  A person or business entity who is allowed to deal in securities not registered with financial authorities.

• Accretion

  The gradual and incremental growth of assets and earnings over time due to business expansion, a company's internal growth, or a merger or acquisition.

• Active Management

  Refers to an investment strategy where a portfolio manager uses research and experience to buy/sell securities in the hopes of generating profits and outperforming a specific index or benchmark, such as the S&P 500 Index or Russell 2000 Index. In contrast, passive management is an approach designed to track (or mimic) the performance of an index or benchmark.

• Amortization

  An accounting method for spreading out the costs for the use of a long-term asset over the expected period the long-term asset will provide value. For example, a company spreads out the cost of a $10,000 patent over 5 years, recording an annual amortization expense of $2,000.

• Angel Investor

  An individual who provides financial support to startup companies or entrepreneurs. Angel investors are usually High-Net-Worth individuals who invest their own money in exchange for ownership equity in the company.

• Angel Tax

  A tax on the funding received by start-ups from angel investors, often at a higher rate than the tax on funding from venture capital firms.

• Altman Z-score

  A statistical measurement used to predict the likelihood of a company's bankruptcy, based on its financial statements.

• Amortization

  An accounting method for spreading out the costs for the use of a long-term asset over the expected period the long-term asset will provide value. For example, a company spreads out the cost of a $10,000 patent over 5 years, recording an annual amortization expense of $2,000.

• Asset Class

  A grouping of investments that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.

• Appreciation

  An increase in the value of an asset or investment over time, which can result in capital gains if the asset is sold. Appreciation occurs for many different reasons, including increased demand, weakened supply, or a change in inflation or interest rates.

• Asset management

  The practice of increasing total wealth over time by acquiring, maintaining, and trading investments that have the potential to grow in value. The goal of asset management is to maximize the value of an investment portfolio over time while maintaining an acceptable level of risk.

• Annual Recurring Revenue

  (ARR) is a metric of predictable and regular revenue generated by customers, normalized on an annual basis and generally used by businesses operating on a subscription-based model.

• Annual Report

  A detailed report that contains comprehensive financial information and shows a company's operations and financial performance in the preceding 12 months. This information is of interest to shareholders and potential investors.

• Allotment

  The process of distributing and allocating equity shares to investors who have applied for the initial public offering (IPO). An IPO is the process in which a privately-held company makes shares of the firm available to the general public for purchase.

• Alpha

  Is a key performance measurement term that gauges the performance of a particular investment strategy relative to the return of a broader market index (e.g., the S&P 500 Index) or benchmark. Alpha can be negative or positive as it simply refers to the difference between the investment return and the benchmark return, adjusted for risk. An investment that has positive alpha is outperforming the benchmark.

• Alternative Risk Transfer (ART)

  Is a method used by organizations to share or transfer risk (i.e., potential losses) with a third party that is willing to bear the risk in exchange for a financial gain. Through the use of derivative or securitization, ART provides a customized risk management solution to address an organization's specific needs.

• Alternative Trading System (ATS)

  A trading platform or exchange that allows the trading of securities outside of traditional exchanges.

• Angel network

  A group of high-net-worth investors who come together to invest collectively in early-stage or start-up companies. These investors typically provide capital and expertise to support the growth of new businesses.

• Arbitrage

  A low-risk short-term investment tactic that attempts to generate small and quick profits when the same, or similar, asset displays different values in two separate marketplaces. Investors attempt to exploit this pricing mismatch by simultaneously buying and selling an investment where the difference is considered the "profit".

• Asset Allocation

  An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon. The four main asset classes— equities, fixed-income, cash or equivalents, and private investments—have different levels of risk and return, so each will behave differently over time.

• Asset Bubble

  Occurs when the price of a financial asset or commodity rises to levels that are well above either historical norms, the asset's intrinsic value, or both. A rapid and unsustainable increase in the prices of assets, often followed by a sharp decline.

• Asset-backed Securities (ABS)

  Is a type security that generates cash flows from debt and is collateralized by a specific pool of income-producing assets, such as auto loans, credit cards, and mortgage loans.

• Asymmetric Risk

  A situation where the potential gains and losses of an investment are uneven, meaning one side of the transaction is exposed to greater risk than its counterpart. Simply put, asymmetric risk occurs when the potential gains from an investment are far greater than the potential losses.

• Automatic Investment Plan

  (AIP) an investment program that allows investors to contribute money to an investment account at regular intervals to be invested in a pre-set strategy or portfolio. Funds can be automatically deducted from an individual's paycheck or paid out from a personal account.

• Averaging down

  A strategy where an investor purchases more shares of an investment at a lower price than their original purchase price, thereby reducing the average cost per share.

• A request by the general partner (GP):

  Of the fund to an investor to contribute a portion of the money that they have committed to invest. Capital calls are common in private equity and typically made when the fund needs additional funds to make investments.

• A contractual agreement

  That specifies how the profits from a private equity fund will be distributed to the limited partners (LPs) and general partners (GPs). The waterfall is typically structured in a cascading manner, with the LPs receiving their returns first, followed by the GPs.

• Alternative Investment

  An investment in asset classes other than stocks, bonds, and cash.

• Accelerator

  A fixed-term, cohort-based program that includes mentorship and educational components and culminates in a public pitch event or demo day.

• Absolute Return

  The return an asset achieves over a certain period of time.

• Acquisition

  A corporate action in which one company buys most, if not all, of another company’s ownership stakes to assume control.

• Absolute Return Strategy

  An investment strategy that aims to produce a positive return over time regardless of whether markets rise or fall.