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  • An accelerated filer is typically a public company that meets a few key criteria: it has a public float between $75 million and $700 million, isn’t eligible for small company reporting breaks, and has been filing reports for at least a year with at least one annual report under the Exchange Act. Why does this matter? A company’s filer status — whether it’s an accelerated filer, large accelerated filer, or non-accelerated filer — determines how quickly it needs to submit reports and what filing requirements it must follow. Understanding your company’s filer status is important for staying compliant with SEC deadlines and financial reporting rules.
  • An accelerator is a program that helps startups and early-stage businesses grow faster. It’s designed for companies that already have a product and business plan in place and are looking to take things to the next level. Like incubators, accelerators offer valuable resources — from hands-on mentorship and expert training to business advice, networking, and often introductions to investors. The big difference? Accelerators usually work with startups over a short, intense period — typically three to six months — and they often invest in the companies they support by taking a small equity stake. If you’re looking to scale your business quickly, an accelerator could be a smart move.
  • Accounts payable is the money a company owes to its suppliers or vendors for goods or services it bought on credit. You’ll find it listed as a liability on the company’s balance sheet, since it represents payments that still need to be made. Managing accounts payable is key for maintaining healthy cash flow and strong relationships with suppliers.
  • Accounts receivable is the money a company is owed by its customers for goods or services sold on credit. You’ll see it listed as an asset on the balance sheet, since it represents incoming cash that the business expects to collect. Keeping track of accounts receivable is important for managing cash flow and making sure customers are paying on time.
  • An accredited investor is someone who meets certain financial or professional criteria set by the SEC under Rule 501(a) of Regulation D. To qualify, an individual might have an income over $200,000 (or $300,000 with a spouse) for the past two years, a net worth over $1 million (excluding their primary home), or specific financial certifications. Being an accredited investor allows you to participate in private investment opportunities, like startups or hedge funds, that aren’t open to the general public. It’s an important status if you’re looking to access more advanced or higher-risk investment options.
  • Additional paid-in capital (APIC) is a line on the balance sheet that shows how much money investors have paid for a company’s stock above its par value. It’s calculated by taking the number of shares issued and multiplying it by the amount paid per share over the stock’s par value. In other words, it reflects the extra funds shareholders have invested in the company, beyond the basic value of the stock.
  • An affiliate is someone who has a close relationship with a company — usually someone who can influence or control it. This can include executive officers, directors, large shareholders, or even other companies connected to the business. In legal and financial contexts, affiliates often have special reporting and compliance requirements because of their ability to impact the company’s decisions.
  • Amortization is the process of gradually reducing the value of an intangible asset over time. It spreads out the cost of things like intellectual property across the asset’s useful life. On the balance sheet, it lowers the asset’s book value, and on the income statement, it’s recorded as an expense. This helps businesses match the expense of using the asset with the revenue it helps generate.
  • Angel investors are wealthy individuals who use their own money to invest in startups and early-stage businesses. They typically get involved during the first rounds of funding, helping young companies get off the ground. Most angel investors qualify as accredited investors under SEC rules and many are experienced entrepreneurs themselves, bringing not just capital but also valuable advice and connections to the businesses they support.
  • AUM, or Assets Under Management, refers to the total market value of the assets that an investment adviser manages on behalf of clients. It gives an idea of the size and reach of the adviser’s business. While different firms might calculate AUM slightly differently, the SEC’s Form ADV lays out the official guidelines for how advisers must report their regulatory assets under management.
  • An audit is an independent review of a company’s financial statements, typically performed by an external certified public accountant (CPA). The goal of an audit is to verify the accuracy and fairness of the company’s financial reports and give investors greater confidence in the company’s financial health. By going beyond what management reports internally, an audit helps ensure that financial statements reflect the true financial position of the business. For investors and stakeholders, understanding “what is an audit” and how it works is key to making informed decisions. Regular financial audits are also an important part of maintaining transparency and trust with shareholders and regulatory agencies.
  • Authorized shares refer to the total number of shares a company is legally allowed to issue, as specified in its corporate charter or organizational documents. This number sets the upper limit on how many shares the company can sell to investors. It’s important to note that authorized shares aren’t the same as outstanding shares — a company may choose to issue only a portion of its authorized shares. Understanding what are authorized shares is key for investors, as it impacts ownership structure, potential dilution, and future fundraising opportunities.
  • A balance sheet is one of the key financial statements a company prepares to show its financial health at a specific point in time. It provides a snapshot of what the company owns (assets), what it owes (liabilities), and the value left for shareholders (equity). For investors and analysts, understanding what is a balance sheet is crucial, as it helps assess the company’s financial position, liquidity, and overall stability. Balance sheets are often used alongside income statements and cash flow statements to give a complete picture of a business’s financial performance.
  • Blue Sky laws, also known as state securities laws, regulate how securities are offered and sold within individual states. These laws are designed to protect investors from fraud and typically cover many of the same activities as federal securities regulations — such as overseeing who can offer and sell securities and how they’re marketed — but they apply only within state boundaries. In certain cases, federal securities laws can override (or preempt) state laws, but many important state-level rules, like antifraud provisions, still apply. If you’re wondering what are Blue Sky laws or how they impact investing, it’s important to understand they play a key role in helping ensure transparency and investor protection at the state level.
  • Burn rate refers to how quickly a company is spending its available cash, usually measured on a monthly basis. It’s an important metric for startups and growing businesses because it shows how long they can keep operating before needing to raise more money or become profitable. Understanding what is burn rate helps both founders and investors track cash flow, manage budgeting, and plan for future funding needs.
  • A BDC, or Business Development Company, is a type of investment fund that blends features of a traditional investment company with those of an operating company. BDCs typically invest in debt or equity of small to mid-sized private businesses and occasionally in small public companies — often those that are just starting out or facing financial challenges and unable to secure bank loans or other funding. In addition to providing capital, BDCs often take an active role in helping manage and support the growth of the companies they invest in. If you’re curious about what is a BDC or how BDC investing works, they offer investors a way to gain exposure to promising businesses that aren’t easily accessible through public markets.
  • A capitalization table, or cap table for short, is a document that lists everyone who owns a stake in a company. It shows who holds equity — like common stock, preferred stock, convertible notes, or warrants — and includes key details such as the type of security, how many shares or units each person owns, how much they paid, and when they bought in (or sold). If you’re wondering what is a cap table or why it matters, it’s an essential tool for startups and investors to track ownership, understand dilution, and plan for future fundraising rounds.
  • Common stock is a type of security that gives investors an ownership stake in a company. If you own common stock, you usually have voting rights — like electing the board of directors or voting on major company decisions, such as mergers or acquisitions. Common shareholders may also receive dividends when the company is profitable. However, it’s important to know that common stockholders are last in line if the company is sold or liquidated. That means debt holders and preferred shareholders get paid first, and common stockholders only receive remaining assets after those obligations are met. If you’re researching what is common stock or how it compares to other types of shares, it’s a key piece of understanding company ownership and investor rights.
  • A convertible note is a type of loan that an investor gives to a company, with the option to convert that loan into equity (usually preferred stock) later on. Convertible notes are super common in early-stage or seed funding rounds when it’s tough to put a precise value on a young startup. Instead of setting a valuation upfront, the note converts into shares when the company raises its next round of funding or hits certain milestones. If you’re learning what is a convertible note or how it works, it’s a flexible way for startups to raise money early while delaying valuation discussions until the company has grown.
  • Cost of Goods Sold (COGS) is an important line on a company’s income statement that shows the direct costs of producing the products it sells or the services it provides. COGS typically includes things like raw materials, direct labor, and any costs involved in purchasing products for resale. In short, COGS tells you how much it actually costs a business to make its money. Understanding what is COGS helps investors and business owners track profitability and manage expenses more effectively.
  • Current assets are assets a company expects to turn into cash within 12 months. They include things like cash, cash equivalents, accounts receivable, and inventory. You’ll find the value of current assets listed on the company’s balance sheet. Understanding what are current assets is key for evaluating a company’s short-term financial health and ability to cover its immediate obligations.
  • Current liabilities are a company’s short-term financial obligations — debts and expenses that are due within the next 12 months. Common examples include accounts payable, employee salaries, and the portion of long-term debt that’s coming due soon. You’ll find current liabilities listed on the company’s balance sheet. Knowing what are current liabilities is important for assessing a company’s ability to meet its short-term financial commitments and manage cash flow.
  • Debt refers to money that a company or individual borrows and agrees to pay back by a certain date, often with interest. Debt can take many forms, like loans, bonds, or notes payable. In some cases, debt can also be converted into equity, depending on the terms of the agreement. Understanding what is debt and how it works is key for managing financial risk, cash flow, and a company’s overall capital structure.
  • Depreciation is the process of gradually reducing the recorded value of a tangible asset, like equipment or buildings, over its useful life. It reflects wear and tear or obsolescence as the asset ages. On the balance sheet, depreciation lowers the asset’s book value, and on the income statement, it’s recorded as an expense. Understanding what is depreciation helps businesses match the cost of an asset to the revenue it generates over time, while also giving a more accurate picture of the company’s financial health.
  • A digital asset — also known as a virtual currency, coin, or token — is an asset that exists and is transferred using blockchain or distributed ledger technology. Digital assets can take many forms, including cryptocurrencies and tokens used in decentralized finance (DeFi) or blockchain-based applications. Depending on how they’re structured, some digital assets may be classified as securities and subject to financial regulations. If you’re exploring what is a digital asset or how digital assets work, they represent a fast-growing area of the modern financial landscape.
  • Dilution happens when a company issues new shares of stock, which reduces the ownership percentage of existing shareholders. In other words, when more shares are added to the market, each shareholder’s slice of the company becomes smaller. Understanding what is dilution is important for investors, as it can impact voting power, earnings per share (EPS), and the overall value of their investment.
  • Disclosure refers to the information a company shares about its financial condition, business operations, and overall performance. The goal of disclosure is to give investors the details they need to make smart, informed decisions about whether to invest in the company. If you’re wondering what is disclosure in investing, it’s all about transparency — making sure investors have access to accurate and timely information about a company’s health and activities.
  • Diversification is an investment strategy where you spread your money across different asset classes, industries, or companies to help reduce risk. The idea is simple: if one investment doesn’t perform well, others in your portfolio can help balance it out. Many investors, including those backing early-stage startups, use diversification to manage risk — whether through pooled funds like venture capital or by personally investing in a variety of companies. If you’re asking what is diversification in investing, it’s one of the smartest ways to protect your portfolio from big losses.
  • Before deciding to invest, prospective investors usually perform due diligence — a careful review of the company’s legal and financial information. This process helps them assess the risks and potential of the investment. Investors often use a due diligence checklist, request key documents, and meet with company leadership to ask questions and clarify details. If you’re exploring what is due diligence in investing, it’s an essential step to make sure you’re making an informed and confident investment decision.
  • Earnings per share, or EPS, shows how much of a company’s profit is assigned to each share of its common stock. It’s a key metric investors use to evaluate a company’s profitability. Basic EPS is calculated using only the current outstanding shares of common stock, while diluted EPS also factors in other securities—like stock options or convertible bonds—that could potentially turn into additional shares. If you’re researching what is EPS or how it impacts stock value, understanding the difference between basic and diluted EPS can give you deeper insight into a company’s financial performance.
  • An EGC, or Emerging Growth Company, is a business that had less than $1.235 billion in total annual revenue during its most recent fiscal year and hasn’t yet sold common stock through a public registration. Once a company goes public through an IPO, it can remain an EGC for up to five years—unless it crosses certain thresholds. It will lose EGC status sooner if it earns $1.235 billion or more in revenue, issues more than $1 billion in non-convertible debt over three years, or becomes a large accelerated filer (meaning it has at least $700 million in public float). One big advantage of EGC status is the ability to use scaled-down disclosure requirements, making it easier for smaller companies to go public. If you’re looking up what is an EGC or Emerging Growth Company definition, it’s a helpful classification that supports young businesses entering the public markets.
  • The term equity can mean different things in investing, but when it comes to raising capital, equity usually refers to ownership in a company. For example, owning common stock gives you an equity stake in a corporation. In an LLC, members hold equity through membership interests, and in partnerships, it’s called a partnership interest. If you’re exploring what is equity in the context of business or investing, it’s all about having an ownership share — and potentially a say — in how the company operates and grows.
  • In most cases, a business can’t offer or sell securities unless the offering is registered with the SEC — or qualifies for an exemption. An exempt offering, also known as a private offering, allows companies to raise money without going through the full SEC registration process, as long as they meet certain requirements. Each exemption under the Securities Act has its own specific rules that companies must follow. If you’re wondering what is an exempt offering or how private offerings work, they’re a popular way for startups and private businesses to raise capital while staying compliant with securities laws.
  • An exempt reporting adviser is an investment adviser that isn’t required to register with the SEC because it qualifies for certain exemptions under the Investment Advisers Act. There are two common exemptions: (1) the Private Fund Adviser Exemption — for advisers managing less than $150 million in U.S.-based private fund assets, and (2) the Venture Capital Adviser Exemption — for advisers that work only with venture capital funds. While exempt reporting advisers don’t go through full SEC registration, they still have to meet specific reporting requirements and comply with certain federal and state rules. If you’re researching what is an exempt reporting adviser or who qualifies as an exempt reporting adviser, it’s important to know that they still operate under regulatory oversight, just with fewer obligations than fully registered advisers.
  • Financial statements are formal records that show how a company is performing financially and how it runs its business. These documents help investors understand where the company’s money is coming from, how it’s being used, and what its current financial position looks like. If you’re wondering what are financial statements, they are key tools for evaluating a company’s financial health. There are four main types of financial statements: ✅ Balance Sheet — Provides a snapshot of the company’s assets (what it owns), liabilities (what it owes), and shareholders’ equity at a specific point in time (like the end of a quarter or fiscal year). ✅ Income Statement — Shows the company’s revenues and expenses over a set period (such as a fiscal year), giving insight into profitability. ✅ Cash Flow Statement — Tracks the flow of cash in and out of the business during a given time period, helping assess liquidity and cash management. ✅ Statement of Shareholders’ Equity — Reflects changes in ownership and equity over time, showing how shareholder value has shifted (different from a cap table, which shows ownership at a specific date). Additionally, the footnotes that accompany financial statements provide extra details and important context for investors and analysts.
  • Form ADV is a required filing that investment advisers use to register with the SEC or state regulators — or to report as an exempt reporting adviser. It gives detailed information about the advisory firm, including its business practices, fees, services, and any potential conflicts of interest. If you’re researching what is Form ADV, it’s an important disclosure document that helps investors understand who they’re working with. Form ADV has three parts, and the first two are publicly available on the SEC’s Investment Adviser Public Disclosure (IAPD) website, so anyone can review key details about an adviser’s operations.
  • Form D is a short filing that companies submit to the SEC after they sell their first securities in an offering under Regulation D. It’s not a full registration, but more of a notice that provides basic details about the company and the offering. Form D typically includes information like the names and addresses of the company’s executives, the size of the offering, and when the first sale took place. If you’re wondering what is Form D or why it matters, it’s an important part of complying with securities laws when raising private capital.
  • A fund of funds is an investment vehicle that puts money into other funds rather than directly buying stocks, bonds, or other securities. This approach is often used to create greater diversification, optimize asset allocation, or achieve specific investment goals. Instead of building a portfolio of individual companies, a fund of funds gives investors exposure to a wider range of strategies and asset classes by investing in multiple underlying funds. If you’re looking up what is a fund of funds or how it works, it’s a smart way to spread risk and access professional fund management across different markets.
  • A funding round is when a company raises money from investors during a specific period, with all investors generally participating under the same or similar terms. Funding rounds are often labeled by stage — starting with a seed round, followed by Series A, Series B, and so on. As a company progresses, its valuation typically grows with each round, and the price per share usually increases as well. Companies often rely on different Securities Act exemptions to structure these funding rounds. However, it’s important to determine whether each round is truly separate or whether they should be viewed as a single offering — a concept known as integration. If you’re exploring what is a funding round, understanding how rounds work and the regulatory considerations behind them is key to navigating startup financing.
  • A general partner (GP) is an individual or entity — often tied to a venture capital, private equity, or investment firm — that raises capital from limited partners to create a private fund structured as a limited partnership. The GP not only manages the fund’s day-to-day operations but also decides where to invest the money. In other fund structures, like an LLC, this role is typically called a managing member or manager under state law and the fund’s operating agreements. If you’re wondering what is a general partner or how GPs function in private funds, they play a key leadership role in both managing and investing the fund’s capital.
  • A general solicitation happens when a company publicly markets or promotes an offering of securities — essentially trying to create interest in the investment. This type of outreach is often seen as marketing the securities to the general public. It’s important to note that some exempt offerings specifically prohibit the use of general solicitation, meaning companies must be careful about how they advertise or promote these investment opportunities. If you’re exploring what is general solicitation or how it affects exempt offerings, it’s a key compliance area in securities law.
  • Goodwill is an intangible asset that comes into play when one company buys another for more than the fair market value of its net assets. The extra amount paid — beyond the value of things like equipment, inventory, and property — is recorded as goodwill. In simple terms, it reflects the value of the acquired company’s reputation, brand strength, customer relationships, and other non-tangible advantages. Goodwill shows up as a line item on the company’s balance sheet. If you’re wondering what is goodwill in accounting or how goodwill is calculated, it’s a key concept in mergers and acquisitions.
  • A hedge fund is a type of private investment fund known for using a wide range of strategies to maximize returns. Unlike traditional mutual funds, hedge funds have much more flexibility in how they invest — often trading in stocks, bonds, derivatives, currencies, and other assets. Many hedge funds aim to boost profits by using techniques like leverage (borrowing money to increase investment size), short selling, and other advanced or speculative strategies. If you’re researching what is a hedge fund or how hedge funds work, they’re typically designed for sophisticated investors looking for higher potential returns — but with higher risks too.
  • An income statement — also known as a profit and loss statement or P&L — is one of the core financial statements a company prepares. It shows how the business performed financially over a specific period of time, detailing revenues, expenses, and profits or losses. If you’re wondering what is an income statement or how to read a profit and loss statement, it’s a key tool for understanding whether a company is making money and how efficiently it’s running its operations.
  • Income tax expense is an estimated amount that shows how much a company owes in taxes on the income it earned during a specific period. You’ll find this expense listed as a line item on the company’s income statement. If you’re looking up what is income tax expense, it helps investors and analysts understand how much of the company’s earnings are going toward taxes, which can impact overall profitability.
  • An incubator is an organization that helps entrepreneurs and early-stage startups get off the ground — often while they’re still refining their business model or developing a product or idea. Incubators typically offer a wide range of support, such as training, mentorship, business advice, admin help, and networking opportunities. Compared to accelerators, incubators usually work with startups over a longer period, giving them time to build a strong foundation. In some cases, incubators may also provide funding or take an equity stake in the companies they support. If you’re exploring what is an incubator or how business incubators work, they can be a valuable resource for founders looking to turn an idea into a successful business.
  • An institutional investor is an organization that invests large amounts of capital, often on behalf of others. Common examples of institutional investors include banks, mutual funds, hedge funds, pension funds, insurance companies, university endowments, and some investment advisers. Because of their size and resources, institutional investors typically have access to a wider range of investment opportunities and can negotiate better terms than individual investors. If you’re looking up what is an institutional investor or how institutional investors impact markets, they play a major role in shaping today’s global financial system.
  • An intangible asset is something valuable that a company owns, but it doesn’t have a physical form — think of things like trademarks, copyrights, patents, or goodwill. Even though you can’t touch them, these assets can have significant value and are recorded on the company’s balance sheet. If you’re wondering what is an intangible asset or how intangible assets are valued, they play an important role in measuring a company’s total worth beyond just its physical property.
  • Interest expense is the cost a company pays on borrowed money — it’s the amount owed or paid to lenders for loans during a specific period. This expense shows up as a line item on the company’s income statement. If you’re looking up what is interest expense or how interest expense affects a company’s profits, it’s an important factor to track when analyzing a business’s debt obligations and overall financial health.
  • An investment adviser is a person or firm that gets paid to provide advice or analysis about investments, such as stocks, bonds, and other securities. This can include professionals like money managers, financial planners, investment consultants, and even general partners of private funds. In most cases, investment advisers must register with either the SEC or state securities regulators, unless they qualify for an exemption (such as an exempt reporting adviser). If you’re researching what is an investment adviser or how to become a registered investment adviser, knowing their role and regulatory requirements is key to understanding how they help clients manage their investments.
  • The Investment Advisers Act is the main law that governs investment advisers in the U.S. In general, if a firm is paid to give advice about securities, it must register with the SEC and follow specific rules meant to protect investors — unless an exemption applies. Even advisers who don’t have to register are still subject to key parts of the law, like anti-fraud rules. If you’re wondering what is the Investment Advisers Act or how it regulates investment advisers, it’s a core piece of legislation that helps ensure transparency and fairness in the investment industry.
  • An investment company is a pooled investment vehicle that raises money by issuing its own securities, then uses those funds to invest in other securities — like stocks, bonds, or other financial assets. Investors in an investment company pool their money, and profits or losses are shared based on each person’s ownership stake. The three main types of investment companies are open-end funds (like mutual funds), closed-end funds, and unit investment trusts (UITs). It’s important to note that not every company investing in securities is classified as an investment company under the Investment Company Act. Some, such as certain private funds, operate outside the scope of this law and aren’t required to register as investment companies under federal securities regulations. If you’re exploring what is an investment company or how investment companies work, understanding these categories helps clarify how different funds are structured and regulated.
  • The Investment Company Act — often called the ’40 Act — is the main law that regulates investment companies in the U.S. It focuses on ensuring transparency for investors by requiring public disclosure about a fund’s investment objectives, structure, and operations. Investment companies covered by the Investment Company Act must provide detailed information about their financial condition, investment strategies, and policies — both when shares are first sold and through regular ongoing reports. If you’re researching what is the Investment Company Act or how the ’40 Act protects investors, it plays a crucial role in promoting transparency and accountability in the world of pooled investment funds.
  • Issued shares are shares that a company has officially issued or sold to investors. When people talk about issued and outstanding shares, they’re referring to shares that have been issued and are still held by shareholders — meaning they haven’t been bought back or retired by the company. If you’re researching what are issued shares or issued vs outstanding shares, understanding this distinction is important because it affects ownership percentages, voting power, and financial metrics like earnings per share (EPS).
  • A large accelerated filer is typically a public company that meets certain criteria: (1) it has a public float of $700 million or more, (2) it does not qualify for smaller reporting company accommodations based on revenue, and (3) it has been a reporting company for at least 12 months and filed at least one annual report under the Exchange Act. A company’s filer status — whether it’s a large accelerated filer, accelerated filer, or non-accelerated filer — determines how quickly it must file reports with the SEC and what reporting requirements it must follow. If you’re wondering what is a large accelerated filer or how filer status impacts SEC deadlines, it’s an important designation for understanding public company reporting obligations.
  • A limited partner (LP) is an investor who contributes capital to a private fund, such as a venture capital or private equity fund. Unlike the general partner (GP), a limited partner doesn’t actively participate in the fund’s investment decisions and has limited liability — meaning they can only lose up to the amount they invested or committed. The rights and responsibilities of limited partners are outlined in the fund’s Limited Partnership Agreement (LPA). If the fund is structured as an LLC instead of a limited partnership, the investor would be called a member under state law. If you’re exploring what is a limited partner or how limited partnerships work, it’s a key role in private fund investing.
  • A liquidation preference is a right that gives certain investors — typically preferred stockholders — priority in getting paid if the company is sold or liquidated. In other words, they get their money back before common shareholders receive anything. Liquidation preferences are often stated as a multiple of the original investment (like 1X or 2X), sometimes with any unpaid dividends added on top. The exact terms of a liquidation preference can vary depending on the class of stock and are usually negotiated during each funding round. If you’re wondering what is a liquidation preference or how liquidation preferences work in venture capital, it’s an important term that affects who gets paid first when things don’t go as planned — or when a company has a successful exit.
  • Liquidity describes how quickly and easily a security can be bought or sold in the secondary market without causing a major change in its price. Highly liquid assets — like stocks of large public companies — can be traded easily because there are plenty of buyers and sellers. On the other hand, securities of private companies are generally considered illiquid because there’s a smaller pool of potential buyers and they may be subject to resale restrictions, such as those under Securities Act Rule 144. If you’re learning what is liquidity in investing or why liquidity matters, it’s an important factor that affects how easily you can convert an investment into cash.
  • Long-term assets are items a company owns that aren’t easily converted to cash within a year. These can include real estate, equipment, intangibles like patents and trademarks, and goodwill. You’ll find the value of long-term assets recorded on the company’s balance sheet. If you’re wondering what are long-term assets or how they differ from current assets, they represent the resources a business uses to generate value over time — beyond just short-term operations.
  • Long-term liabilities are financial obligations a company is responsible for paying more than one year into the future. Common examples include long-term debt, deferred bonuses, and various commitments and contingencies. These liabilities are recorded on the company’s balance sheet and help give investors and analysts a clearer picture of the company’s long-term financial health. If you’re wondering what are long-term liabilities or how they differ from current liabilities, they represent future payments the company must plan for beyond its short-term obligations.
  • Management fees are fees paid from a fund’s assets to the fund manager or adviser for overseeing and managing the fund. In private equity and similar funds, managers typically charge a management fee based on a percentage of either committed capital or invested capital — often something like 1% or 2% annually. On top of this, managers also earn a performance fee — usually a percentage of profits earned above a set benchmark — commonly called carried interest. For example, a typical fee structure of 2% management fee and 20% performance fee is often referred to as a “2 and 20” arrangement. If you’re researching what are management fees or how private equity fund fees work, understanding this structure is key to knowing how fund managers get paid.
  • Market capitalization — or market cap — is the total market value of a public company’s outstanding shares of stock. It’s calculated by multiplying the company’s total number of outstanding shares by the current market price per share. Market cap is often used to gauge a company’s size and helps investors compare companies across different industries. If you’re wondering what is market cap or how to calculate market capitalization, it’s a key metric for evaluating a company’s market value and overall standing in the stock market.
  • The maturity date is the date when the final payment on a loan or other debt is due to the lender. It marks the official end of the loan term — meaning the borrower must pay off the remaining balance by this date. If you’re researching what is a maturity date or how maturity dates work in loans and bonds, it’s an important detail that determines when a debt obligation must be fully settled.
  • A membership interest is a type of security that represents ownership (or equity) in a limited liability company (LLC). On a company’s cap table, membership interests are typically shown either as percentages or units. LLCs use different terms than corporations — for example, members instead of shareholders, operating agreement instead of bylaws, and membership interests instead of stock or shares. An LLC can also create different classes of membership interests, giving members varying levels of voting power and economic rights. If you’re looking up what is a membership interest or how LLC ownership works, understanding these distinctions is key when structuring or investing in an LLC.
  • Net income (or net loss) shows how much profit a company made — or how much it lost — during a specific period, after subtracting all expenses from its revenues and gains. It’s one of the most important figures on the income statement because it reflects the company’s bottom line. If you’re wondering what is net income or how to calculate net income, it’s a key measure of a company’s profitability and overall financial performance.
  • A non-accelerated filer is generally a public company that doesn’t meet the criteria to be classified as an accelerated filer or large accelerated filer. Typically, these are companies with a public float of less than $75 million, or businesses that qualify for smaller reporting company accommodations based on their revenue. A company might also be a non-accelerated filer if it hasn’t been a reporting company for at least 12 months or hasn’t filed an annual report yet under the Exchange Act. A company’s filer status — whether it’s a non-accelerated filer, accelerated filer, or large accelerated filer — determines how quickly it must submit reports to the SEC and what reporting requirements it must follow. If you’re wondering what is a non-accelerated filer or how filer status affects SEC deadlines, it’s an important classification for understanding reporting obligations.
  • Operating expenses — also known as selling, general, and administrative expenses (SG&A) — are the overhead costs of running a business that aren’t directly tied to producing products or delivering services. These expenses show up on a company’s income statement and typically include things like rent, salaries, marketing, office supplies, and utilities. If you’re wondering what are operating expenses or how operating expenses impact profitability, they’re a key factor in understanding a company’s day-to-day costs and overall financial performance.
  • Performance fees are payments made to an investment adviser based on how well a client’s portfolio performs. These fees are often calculated as a percentage of the investment profits. A common example is carried interest — a type of performance fee typically earned by private equity and venture capital fund managers, where they receive a portion of the fund’s profits. Private equity funds often follow a “2 and 20” fee structure, meaning a 2% annual management fee (based on assets under management) and a 20% performance fee (based on profits above a set benchmark). Performance fee structures like this are designed to align the interests of the fund manager and investors. Registered investment advisers should also consult Section 205(a) of the Investment Advisers Act for detailed rules about performance-based fees. If you’re wondering what are performance fees or how carried interest works, understanding these terms is key when evaluating fund manager compensation.
  • A pooled investment vehicle — often called a fund — is a structure created by an investment adviser to collect money from multiple investors. Each investor buys an interest in the fund, and the adviser then invests that pooled money on behalf of everyone in the fund. Profits and losses are typically shared among investors based on their ownership stake. Funds can vary widely in size, how long they hold investments, and what types of assets they invest in. Common examples of pooled investment vehicles include mutual funds, exchange-traded funds (ETFs), hedge funds, private equity funds, and venture capital funds. If you’re wondering what is a pooled investment vehicle or how do pooled funds work, they’re a popular way for investors to gain diversified exposure to a broad range of investment opportunities.
  • A portfolio company is a business that has received investment from a fund, such as a venture capital or private equity fund. It’s one of the companies that make up the fund’s overall investment portfolio. Typically, a fund invests in multiple portfolio companies to diversify risk and maximize returns. If you’re exploring what is a portfolio company or how portfolio companies fit into a fund’s strategy, they are the individual businesses that the fund backs in hopes of generating strong returns for its investors.
  • Preferred stock is a type of equity security that gives investors ownership in a company — but with special rights and protections that go beyond what common stockholders typically receive. Some of these advantages include: 1️⃣ Liquidation preference — preferred shareholders get paid first if the company is sold or liquidated. 2️⃣ Anti-dilution protection — features like pro-rata rights to invest in future funding rounds or minimum conversion price terms to help preserve ownership percentage. 3️⃣ Dividend rights — preferred shareholders may have the right to receive dividends, often before common stockholders. 4️⃣ Limited voting rights — such as the right to elect certain directors or approve major business transactions. Because of these extra benefits, preferred stock is usually sold at a higher price (a premium) compared to common stock, based on the company’s valuation at the time of the investment. If you’re exploring what is preferred stock or how preferred shares work, they’re a common tool used in venture capital and private equity deals to give investors added protections and upside.
  • A private equity fund is a type of private investment fund that’s managed by a private equity firm, which may need to register with the SEC as an investment adviser. Private equity funds use a variety of investment strategies, such as buyouts, growth equity, and even venture capital. A common approach is for the fund to acquire a controlling interest in a portfolio company and then actively help manage and grow the business to increase its value. Some private equity funds also focus on making minority investments in fast-growing startups or emerging businesses. If you’re researching what is a private equity fund or how private equity funds work, they’re a powerful way for investors to back promising companies and drive long-term value creation.
  • A private fund is a type of pooled investment vehicle that’s excluded from being classified as an investment company under Section 3(c)(1) or 3(c)(7) of the Investment Company Act. You’ll often hear these called 3(c)(1) funds or 3(c)(7) funds. The term private fund commonly refers to private equity funds, venture capital funds, and hedge funds. Even though private funds are exempt from certain regulations, they and their advisers must still comply with other federal and state securities laws. For example, when raising money through exempt offerings, private funds are still subject to securities regulations. Also, fund managers may need to register as investment advisers with the SEC or state regulators — unless they qualify for an exemption, like being an exempt reporting adviser. If you’re looking up what is a private fund or how private funds are regulated, it’s essential to understand these legal nuances when investing in or managing these funds.
  • Private offering is a term often used to describe certain types of exempt offerings — meaning offerings of securities that don’t require full SEC registration. Private offerings are typically made to a limited number of investors, often accredited or institutional, under specific exemptions provided by securities laws. If you’re wondering what is a private offering or how exempt offerings work, they allow companies to raise capital without going through the costly and time-consuming process of a public offering — while still complying with federal and state regulations.
  • Public float refers to the total value of a public company’s shares that are available for trading by public investors — in other words, shares held by non-affiliates of the company. It does not include shares owned by insiders, such as executives or directors. Public float is usually calculated by multiplying the total number of voting and non-voting common shares held by public (non-affiliate) shareholders by the current market price per share. Public float plays an important role in determining a company’s filer status with the SEC — for example, whether it qualifies as a smaller reporting company. If you’re wondering what is public float or how public float affects SEC filing requirements, it’s a key metric used in regulatory reporting.
  • A qualified purchaser is an investor who meets specific financial and sophistication thresholds as defined under the Investment Company Act and related rules. For example, an individual typically qualifies as a qualified purchaser if they own $5 million or more in investments. Similarly, an entity (such as a fund or institutional investor) may qualify if it owns and invests at least $25 million on a discretionary basis. Being classified as a qualified purchaser opens the door to certain types of private investment opportunities that are generally limited to highly sophisticated investors. If you’re looking up what is a qualified purchaser or qualified purchaser vs accredited investor, this designation plays a key role in determining access to exclusive funds and investment vehicles.
  • An investment adviser to venture capital funds may qualify as an exempt reporting adviser — meaning they aren’t required to register with the SEC — if their fund meets certain criteria. Under Rule 203(l)-1 of the Investment Advisers Act, the fund must invest at least 80% of its assets in qualifying investments, which typically means direct equity investments in private companies. It’s important to note that certain assets — such as pure debt instruments, secondary shares, public securities, fund of fund investments, and some digital assets — generally do not count as qualifying investments. If you’re researching what is an exempt reporting adviser for venture capital funds or what qualifies as a qualifying investment, understanding these guidelines is essential for compliance and fund structuring.
  • A qualifying venture capital fund is a type of private fund that is excluded from being classified as an investment company under Section 3(c)(1) of the Investment Company Act, provided it meets certain criteria. To qualify, the fund must: 1️⃣ Have no more than 250 beneficial owners; 2️⃣ Have no more than $12 million in total capital contributions and uncalled capital commitments; and 3️⃣ Meet the definition of a venture capital fund. If you’re looking up what is a qualifying venture capital fund or Section 3(c)(1) fund requirements, this classification allows certain smaller venture funds to operate with fewer regulatory burdens while still offering investors access to early-stage investment opportunities.
  • A registered investment adviser (RIA) is an investment adviser that is officially registered with either the SEC or their state’s securities regulator. Generally, an adviser will register at the state level if they manage less than $100 million in assets under management (AUM) — in fact, advisers below this threshold are typically prohibited from registering with the SEC. Once an adviser reaches or exceeds $100 million in AUM, they may be required to register with the SEC instead. If you’re exploring what is a registered investment adviser or when an adviser must register with the SEC, understanding these thresholds is crucial for ensuring compliance with the appropriate regulatory framework.
  • A registered offering — often called a public offering — refers to an offer and sale of securities that has been properly registered with the SEC under the Securities Act. For a company to conduct a registered offering and sell securities to the public, it must first file a registration statement with the SEC. The company can’t sell the securities until this statement becomes effective. In contrast, some offerings — known as exempt offerings — do not require SEC registration because they qualify for certain exemptions under the Securities Act. If you’re wondering what is a registered offering or how a public offering differs from an exempt offering, understanding these distinctions is essential for navigating the securities market.
  • A Regulation A offering — often called a “mini IPO” — is a type of exempt offering that allows a company to raise up to $75 million from the public. The process is somewhat similar to a full registered offering but involves fewer regulatory requirements and is more streamlined. Companies that complete a Regulation A offering can sell securities to the general public and must comply with certain ongoing reporting requirements afterward. If you’re exploring what is a Regulation A offering or how a mini IPO works, it’s a popular option for companies looking to raise capital with less regulatory burden than a traditional IPO.
  • A Regulation Crowdfunding offering is a type of exempt offering that allows businesses to raise capital by selling securities to the public through online crowdfunding platforms. In this model, companies collect relatively small investments from a large number of people. It’s different from rewards-based or donation-based crowdfunding (like on Kickstarter or GoFundMe), which do not involve securities and aren’t regulated by the SEC. Companies that complete a Regulation Crowdfunding offering must also meet certain ongoing reporting requirements. If you’re researching what is a Regulation Crowdfunding offering or how investment crowdfunding works, it’s a flexible way for startups and small businesses to access public funding without going through a full IPO.
  • Regulation D is a set of SEC rules that govern certain types of exempt offerings, allowing companies to raise capital without going through the full registration process. Regulation D includes several key exemptions: Rule 504 (often called “limited offerings”), Rule 506(b) (commonly known as “private placements”), and Rule 506(c) (referred to as “general solicitation offerings”). Each exemption under Regulation D comes with specific requirements that companies must follow to qualify. If you’re researching what is Regulation D or how Reg D offerings work, it’s a crucial part of U.S. securities law that makes it easier for businesses to raise money privately.
  • Restricted securities are securities that were originally acquired directly from the company or one of its affiliates, usually through an exempt offering. These securities can’t be freely sold on the public market right away. In order to resell restricted securities, the holder must either qualify for an exemption from SEC registration requirements or wait until certain conditions are met. If you’re exploring what are restricted securities or how to sell restricted stock, it’s important to understand the limitations and rules that apply to these types of investments.
  • Restricted stock units (RSUs) and restricted stock awards (RSAs) are forms of equity compensation that companies grant to employees. While both reward employees with company stock, they work a bit differently and have different tax implications: 1️⃣ With an RSA, the employee owns the underlying shares as of the grant date. However, those shares can only be sold or transferred after certain vesting conditions — such as time or performance milestones — are met. 2️⃣ An RSU gives the employee the right to receive shares in the future, once they satisfy the required vesting conditions. The employee does not own any shares on the date of the grant. 3️⃣ Vesting conditions for RSUs or RSAs often include length of employment, achievement of company or individual performance goals, or other agreed-upon milestones. If you’re researching what are RSUs and RSAs or how equity compensation works, understanding the differences between these two stock awards can help employees and investors make smarter decisions about their compensation and tax planning.
  • Retained earnings (or accumulated loss) represents the total net profit or net loss a company has earned since it was founded, after dividends have been paid to shareholders. This figure is shown on the company’s balance sheet and reflects how much of the business’s profits have been reinvested back into the company over time, versus distributed to shareholders. If the company has experienced more losses than gains, this line item will show as an accumulated loss. If you’re exploring what are retained earnings or how retained earnings affect a balance sheet, it’s a key measure of a company’s long-term financial performance and stability.
  • Revenue is the total dollar amount a company earns from selling its products or providing services to customers. It represents the top line on the company’s income statement, showing the amount of money generated before expenses are deducted. If you’re wondering what is revenue or how revenue differs from profit, it’s a key metric used to gauge a company’s sales performance and overall business growth.
  • An RBIC (Rural Business Investment Company) is a privately-owned investment fund that operates under a license and regulatory oversight from the U.S. Department of Agriculture (USDA). RBICs raise capital from investors and use those funds to make debt and equity investments in qualifying small businesses, with a focus on companies based in rural areas. If you’re researching what is an RBIC or how Rural Business Investment Companies work, these funds help support economic development and job creation in underserved rural communities.
  • Scaled disclosure — also called tailored disclosure — refers to certain disclosure accommodations provided under federal securities laws for smaller or newly public companies. These include companies like smaller reporting companies, non-accelerated filers, or emerging growth companies (EGCs). The goal of scaled disclosure is to allow these businesses to provide less extensive disclosures in both their registered offerings and ongoing public company reports, compared to larger, more established companies. The purpose of these accommodations is to help promote capital formation and reduce compliance costs for smaller or newly public companies, while still maintaining necessary investor protections. If you’re researching what is scaled disclosure or how scaled disclosure benefits small companies, it’s a key concept for businesses looking to enter public markets more affordably.
  • A secondary market is where investors buy and sell existing securities — like stocks or bonds — with other investors, rather than purchasing them directly from the issuing company. In the secondary market, ownership of securities simply changes hands, and the company itself doesn’t receive any new capital from these transactions. Popular examples of secondary markets include stock exchanges like the New York Stock Exchange (NYSE) or Nasdaq. If you’re exploring what is a secondary market or how secondary markets work, they play a critical role in providing liquidity and helping investors trade securities after the initial sale.
  • The Securities Act — often called the '33 Act — is a foundational U.S. law that regulates how securities are offered and sold to the public. It has two primary goals: 1️⃣ To ensure that investors receive key financial and business information about the securities being offered; 2️⃣ To prevent fraud, misrepresentations, and deceptive practices in the sale of securities. Under the Securities Act, companies must typically file a registration statement with the SEC containing detailed information about the company, the securities being offered, and the terms of the offering — unless the offering qualifies for an exemption. If you’re exploring what is the Securities Act of 1933 or how securities offerings are regulated, this law forms the backbone of investor protection in U.S. capital markets.
  • The U.S. Securities and Exchange Commission (SEC) is a federal agency responsible for regulating and enforcing the nation’s securities laws. Its mission is threefold: 1️⃣ Protect investors from fraud and unfair practices; 2️⃣ Maintain fair, orderly, and efficient markets to ensure transparency and trust in the financial system; 3️⃣ Facilitate capital formation to help businesses raise funds and drive economic growth. If you’re wondering what is the SEC or what does the SEC do, it plays a vital role in overseeing U.S. financial markets, safeguarding investor interests, and supporting the healthy flow of capital.
  • The Exchange Act — commonly known as the '34 Act — established the U.S. Securities and Exchange Commission (SEC) and gave it broad authority to oversee the U.S. securities industry. Under the Exchange Act, the SEC has the power to register, regulate, and supervise key market participants, including brokerage firms, transfer agents, clearing agencies, and self-regulatory organizations (SROs). The Exchange Act also prohibits fraudulent activities, such as insider trading, and grants the SEC the authority to discipline firms and individuals who violate securities laws. Additionally, it requires companies with publicly traded securities to provide regular, periodic reports to ensure transparency for investors. If you’re exploring what is the Exchange Act of 1934 or how the '34 Act regulates the markets, it plays a critical role in maintaining fair and efficient U.S. securities markets.
  • In capital formation transactions, the term security often refers to instruments like equity, convertible debt, stock, shares, or membership interests. More broadly, securities include a wide range of investment instruments — from stocks and bonds to investment contracts. Under federal securities laws, the definition of a security is intentionally broad. These laws require that any offer or sale of securities must either be registered with the SEC or qualify for an exemption from registration. If you’re researching what is a security or how securities are regulated, understanding this definition is fundamental to navigating both public and private investment markets.
  • A seed round is usually a startup’s very first official funding round. It’s often raised from friends and family, angel investors, or early-stage venture funds. In many cases, the investment is structured as a convertible note or SAFE, which can later convert into equity. The capital raised during the seed round typically helps the company with product development, market research, and building an initial team. If you’re wondering what is a seed round or how seed funding works, it’s a crucial early step in helping startups turn their ideas into viable businesses.
  • Companies often raise capital through multiple funding rounds, with investors — frequently venture capital firms — providing funding in exchange for preferred stock. These rounds are typically organized into stages known as series rounds and are commonly categorized as early-stage (Series A and B) or late-stage (Series C and beyond). Here’s how these rounds usually work: 1️⃣ Series A — Helps companies with an initial customer base and a proven concept to further develop their product and grow the business. 2️⃣ Series B — Focuses on scaling the company, expanding production, and growing the customer base. 3️⃣ Series C — Supports more mature companies in optimizing operations, often preparing for an initial public offering (IPO) or strategic acquisition. If you’re exploring what is a Series A round or how venture capital funding rounds work, understanding each stage helps clarify how startups raise capital and progress toward larger market opportunities.
  • A SAFE (Simple Agreement for Future Equity) is an agreement where an investor provides funding to a company in exchange for the promise of receiving an ownership interest in the company if certain triggering events happen — such as a future equity financing round or the acquisition of the company. Until such an event occurs, the SAFE holder does not own any equity in the business. SAFEs are commonly used during seed rounds to simplify early-stage fundraising. They are similar to convertible notes, but with a key difference: SAFEs generally don’t set a valuation on the equity at the time of issuance — instead, that calculation is deferred until the triggering event. If you’re exploring what is a SAFE in startup investing or how SAFEs work vs convertible notes, it’s one of the most popular tools for early-stage financing.
  • An SBIC (Small Business Investment Company) is a privately-owned investment fund that is licensed and regulated by the U.S. Small Business Administration (SBA). SBICs raise capital from investors and use those funds to make both equity and debt investments in qualifying small businesses. The goal of SBICs is to help support the growth and success of small businesses across the U.S. If you’re researching what is an SBIC or how SBICs invest, these funds play a key role in promoting small business development and driving economic growth.
  • An SRC (Smaller Reporting Company) is generally a company that meets certain public float or revenue thresholds when it first determines its status. A company qualifies as an SRC if it has: 1️⃣ A public float of less than $250 million, or 2️⃣ Less than $100 million in annual revenues and either no public float or a public float of less than $700 million. SRCs can choose to take advantage of scaled disclosure requirements, which allow smaller public companies to provide less extensive disclosures in SEC filings. If you’re wondering what is an SRC or how smaller reporting company status works, this designation helps reduce compliance costs while maintaining transparency for investors.
  • While the SEC regulates and enforces federal securities laws, each U.S. state also has its own securities regulator. These state regulators oversee the offer and sale of securities within their state and enforce state-level securities laws, commonly known as Blue Sky laws. If you’re wondering how state securities laws work or what are Blue Sky laws, it’s important to know that securities offerings often need to comply with both federal and state requirements, depending on where the securities are being offered.
  • A stock is a type of security that represents ownership (or equity) in a corporation. People who own stock are known as stockholders or shareholders. Companies may issue different classes of stock — such as common stock and preferred stock — each offering different voting rights and economic benefits. A stockholder’s ownership is typically shown either as a percentage of total stock or as a specific number of shares on the company’s capitalization table (cap table). If you’re wondering what is a stock or how stock ownership works, it’s one of the most common ways investors hold an ownership stake in a company.
  • Stock-based compensation — also known as equity compensation or share-based compensation — is a way companies reward employees, advisors, and contractors by granting them securities, such as stock options or restricted stock units (RSUs), instead of (or in addition to) cash. Offering stock-based compensation helps align employee incentives with the long-term success of the business, making it easier to attract and retain top talent. It also allows companies, especially startups, to preserve cash for other operational needs. If you’re exploring what is stock-based compensation or how equity compensation works, it’s a key strategy many businesses use to motivate and reward their teams.
  • A stock option gives the holder the right — but not the obligation — to purchase a specific number of company shares at a set strike price after meeting certain vesting conditions. Once the option is vested, the holder can choose to exercise it — meaning they can buy the shares at the pre-agreed price, regardless of the current market price. If you’re wondering what is a stock option or how stock options work, they are a popular form of equity compensation used to incentivize employees, advisors, and executives.
  • A tangible asset is an asset with a physical form — something you can see or touch — such as cash, real estate (like buildings or land), or equipment. The value of tangible assets is recorded on a company’s balance sheet and plays a key role in assessing the company’s overall worth. If you’re exploring what is a tangible asset or how tangible assets differ from intangible assets, they represent the physical resources a business owns and uses to operate and generate value.
  • When a company buys back its own shares from shareholders, those repurchased shares are known as treasury stock. Once returned to the company’s treasury, these shares are no longer counted as outstanding and can either be retired permanently or reissued later for purposes like employee compensation or raising capital. If you’re wondering what is treasury stock or how share buybacks work, treasury stock is an important tool companies use to manage ownership structure and shareholder value.
  • A company’s valuation represents the estimated worth of the business, typically determined by an analyst or through negotiation between the company and its investors. The valuation helps set the terms of an investment — it determines how much equity an investor will receive in exchange for their capital. Valuations are commonly discussed in two ways: ✅ Pre-money valuation — the company’s value before the new investment round. ✅ Post-money valuation — the company’s value after the new investment is added. For example, if an investor offers $250,000 based on a $1 million valuation, the post-money valuation would be $1.25 million, and the investor’s ownership stake would be calculated accordingly. If you’re researching what is company valuation or how pre-money and post-money valuations work, these are key concepts in startup investing and venture capital.
  • A venture capital fund is a type of private fund managed by a venture capital firm, which may need to register with the SEC as an investment adviser. Venture capital (VC) funds typically invest in businesses in exchange for equity, and many VC firms specialize in certain industries or in companies at specific stages — such as early-stage startups, mature businesses, or late-stage companies preparing for exit. Under Rule 203(l)-1 of the Investment Advisers Act, a venture capital fund must meet specific criteria to qualify as such. A VC fund: 1️⃣ Represents to investors that it pursues a venture capital strategy. 2️⃣ Generally limits redemption rights (meaning investors can’t easily withdraw their money). 3️⃣ Holds no more than 20% of its total capital in non-qualifying investments (commonly called the 20% non-qualifying basket). 4️⃣ Limits the use of leverage (borrowed money). Venture capital investments are long-term by nature — investors typically remain committed until a liquidity event, such as an acquisition or an initial public offering (IPO), when they hope to earn returns on their investment. VC funds are often structured to last at least 10 years (and sometimes longer), giving managers time to grow and exit their portfolio companies. If you’re researching what is a venture capital fund, how VC funds work, or venture capital investment strategies, these funds are a key driver of innovation and startup growth in many industries.

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