Glossary

  • Accredited investor

    A person who has a special status in accordance with the legislation on financial regulation. Usually, these are people with high annual income, banks and other financial institutions that have access to risky investments and securities.

  • Angel investor

    A high net worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company.

  • Appraisal

    An opinion of the value of a property. Usually, an accredited appraiser documents this estimate in a written report.

  • 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.

  • Backer

    This is a name for the people who provide funding for a person or project.

  • Bootstrapping

    Process of building a company with a small initial capital without external investment.

  • Borrower

    A person or company that has received money from another party with the agreement that the money will be repaid.

  • Capitalization rate

    A term used in real estate investing as one measure of investment return. It is calculated by dividing the Net Operating Income (NOI) the property generates by the current market value of the property.

  • Commercial property

    A property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute the residential real estate.

  • Crowdfunding

    The practice of soliciting financial contributions from a large number of people especially from the online community. Crowdfunding activities are generally intermediated by crowdfunding platforms.

  • Crowdfunding platform

    An online platform that provides a way for many people (the crowd) to financially support (fund) a person, project or entity.

  • Crowdfunding sponsor

    A person or group of persons that work with the asset you’re investing in, including its acquisition, management, and disposition.

  • Crowdsourcing

    Piecing together skills and tasks performed by many individuals to put together a larger project.

  • Debt crowdfunding

    A form of crowdfunding in which the contributors provide support in the form of a loan with the expectation of financial return. They can receive interests at the end of the time loan (traditional model), or an agreed share of the profits of the firm (revenue sharing model). The target crowds are investors and entrepreneurs. Debt crowdfunding is further divided into peer-to-peer (P2P) lending and business loans.

  • Direct lending

    Provision of loans for the development for small and medium-sized enterprises (SME).

  • Donation crowdfunding

    A form of crowdfunding in which the contributors don’t have any expectation of financial returns, instead they are compensated with immaterial benefits (acknowledgements, special mentions…). The typical target crowd are philanthropists or avid fans. They are driven more by intrinsic motivations rather than investing strategies. Material rewards could be present as well, but they have just symbolic meaning.

  • Donor

    A person or organization which donates money voluntarily, most often for a charitable purpose.

  • Due diligence

    An extensive process of checking financial documentation, as well as verifying the identity of the client before concluding various types of transactions.

  • Equity crowdfunding

    A form of crowdfunding in which the contributors receive equity in the entity in return for financing, i.e. the contributors are compensated with shares in the issuing company. Hence the contributors become shareholders of the company, with the rights and duties deriving from this. The target crowd consists of investors and businesses of various sizes.

  • FinTech

    Financial technology which aims to improve and automate financial services. In a broad sense, fintech means any company that uses new technologies to simplify and improve interaction with customers in the financial sector.

  • FSCS

    Financial Services Compensation Scheme - this is a deposit insurance scheme for UK residents. Simply put, this is a kind of insurance that covers the damages of customers if their company went out of business and cannot fulfil its obligations.

  • Fundraiser

    A person or organization that collects money for a specific purpose, as usual for charity.

  • High-net-worth individual

    (HNWI) — a person or family with a high level of own liquid capital.

  • Individual investor

    Not a professional investor, а person has no legal restrictions, unlike legal entities.

  • Initial Public Offering

    (IPO) — the first sale of stock to public investors by a new company or by an existing company in a new product or project.

  • Institutional investor

    A company or organization that has the legal rights to invest on behalf of other people.

  • ISA

    An individual savings account in the UK, which is not subject to income tax. For example, the ISA allowance for the 2020/21 tax year is £20,000.

  • Issuer

    A company that raises money by creating and selling a security to investors.

  • KYC

    Process of knowing your customer, identification of the client used in financial institutions before conducting financial transactions.

  • Minimum investment

    Minimum amount required to invest or buy shares. The amount can vary from hundreds of thousands of dollars to millions.

  • Minority shareholders’ agreement

    An agreement that supplements the constitutional documents of the company. The contents of individual shareholders’ agreements vary, but they are commonly used for regulating the ownership and voting rights of the company’s shares, management of the company, dispute resolution, and protection of the competitive interests of the company.

  • Net Operating Income

    (NOI) — a before-tax figure, appearing on a property’s income and cash flow statement, that excludes principal and interest payments on loans, capital expenditures, depreciation, and amortization.

  • Offering

    Process of issuing and selling securities. As usual, used to raise capital for the development or expansion of companies.

  • P2P lending

    Peer-to-peer loans without intermediaries. P2P lending helps individuals to obtain loans without the participation of financial institutions, such as banks.

  • Pitch

    This is the promotion of the crowdfund used to garner interest from potential funders.

  • Platform

    This is the term used to describe the various web sites which facilitates crowdfunding (eg: Kickstarter is a crowdfunding platform).

  • Pledge

    This is a term used to describe the promise to pay the person/people crowdfunding the defined amount.

  • Portfolio diversification

    A technique of risk management which involves owning multiple investments in order to diversify the risk through a wide variety of assets, both in terms of quality and quantity. The rationale of diversification is to reduce non-systematic risk in a portfolio in order to cover the poor performance of some investments with the good performance of others.

  • Primary market

    The first sale of new securities to investors in order to raise investment money for the issuing company.

  • Project

    This is the crowdfund campaign for the product or cause.

  • Real estate crowdfunding

    An investment in a property under construction or completion with a view to future income generation.

  • Repayment

    A refund of funds previously borrowed from the lender. Typically, divided into several payments that are paid according to a certain schedule.

  • Residential property

    Any property that has designated for single-family homes, flats, co-operatives and any other place where people live.

  • Retail investor

    A person who buys/sells debts, equity or securities through a broker, bank or other authorized person.

  • Return on investment

    (ROI) — an indicator of investment performance. It shows the return on investment, where the benefit is divided by the value of the investment. Most often measured as a percentage.

  • Reward crowdfunding

    A form of crowdfunding in which contributors receive rewards for their contributions. There are three categories according to the benefits the contributors receive: sponsor, pre-selling and reward based crowdfunding. In the sponsor campaigns the contributors gain visibility in exchange for their financial support; in pre-selling operations the contributors have the right to receive the product before it is sold on the market; in the general reward campaigns the financers receive some kind of benefits, either monetary or not. The target crowd is the same as for the donation model.

  • Rewards

    This is what the funders get in exchange for pledging on a pre-sale/rewards-based crowdfunding platform.

  • Risk assessment

    Process of analyzing the feasibility of specific investments, which is aimed at identifying possible risks, failures and their consequences.

  • Secondary market

    This is a financial market where investors buy and sell securities that they already own.

  • Startup

    A new business, often using new technologies or novel process, and often outside investment funding, to grow quickly.

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