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Glossary
Angel investor
Angel investors are usually high-net-worth individuals who make direct equity investments in companies. (See Equity capital)
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Business plan
A document that spells out a company's expected course of action for a specified period, usually including a detailed listing and analysis of risks and uncertainties. For the small business, it should examine the proposed products, the market, the industry, the management policies, the marketing policies, the production needs and the financial needs. Frequently, it is used as a prospectus for potential investors and lenders.
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Cash flow positive
When a company’s revenues can cover its operating costs, it is considered cash flow positive.
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Cloud Computing
A new generation of computing that utilizes distant servers for data storage and management, allowing the device to use smaller and more efficient chips that consume less energy than standard computers.
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Collateral
An asset pledged as security to ensure payment or performance of an obligation. In bank lending, it is generally something of value owned by the borrower. If the borrower defaults, the asset pledged may be taken and sold by the lender to fulfill completion of the original loan contract.
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Convertible Debt
A security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder. In most cases, a convertible debt security is converted to equity or stock.
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Early-stage business
An early stage business is similar to a start-up. However, when the term “early-stage” is used, it typically means that the business is in its early operational stage, but has no or little revenue.
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Entrepreneur
One who assumes the financial risk of the initiation, operation, and management of a given business or undertaking.
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Equity capital
Equity investment is the provision of capital to a firm in return for partial ownership of that firm. Investments are typically made by venture capital firms or angel investors. Equity investors are not looking for repayment in the way that a loan company expects. Instead, they are looking for an exit strategy whereby they can recoup their investment with a good profit. (See Exit strategy)
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Established business
An established business has measurable revenue history for at least two years.
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Exit strategy
For an equity investor (See Angel investor, Venture Capital), the company in which they invest must have an exit strategy in order for profits to be realized. An exit strategy could be: an IPO (Initial Public Offering) where a company goes public and shares now have value on the open market; or the sale of the company to a public or private entity.
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Expansion
Refers to growth that comes from adding new offices or manufacturing plants, moving beyond previously defined geographical borders or adding new products or business lines. It does not refer to growth that only comes from increased revenue.
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Growth-Stage Businesses
A business that is typically at or near breakeven in terms of operating expense to revenue and is poised to grow quickly.
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Lab spin-off
In New Mexico, there are several federal government laboratories that create new technologies. Sometimes these technologies have commercial uses. Lab employees are allowed to use the technology as the basis for their own start-up ventures
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Loan
A loan is a type of debt. The borrower receives an amount of money from the lender, which is typically paid back in regular installments. This service is generally provided at a cost that is referred to as interest on the debt. Often a loan is secured with collateral. (See Collateral)
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Manufacturing industry
The manufacturing industry includes any businesses involved in the transformation of raw materials into finished goods for sale.
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Nonprofit / Not-for-profit
A nonprofit or not-for-profit organization is an entity whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes, without concern for monetary profit.
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Scalable Businesses
Refers to the ability of a business to grow beyond a narrow audience to a larger one (usually beyond state lines) while maintaining an operations-to-revenue ration where profits can be maintained during growth.
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Seed-stage business
A seed-stage business is one that is typically in the idea or concept phase. There may be one or more people committed to the business concept, but there is no revenue yet.
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Service industry
Businesses in the Service industry are primarily concerned with providing services for the benefit of the consumer and/or other businesses. It includes businesses that are involved in areas such as insurance, banking and finance; provision of gas and electricity and water; transport; communications; retailing and wholesaling.
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Start-up
A start-up business is in its earliest stages of development, typically before it has an established revenue stream. A seed stage business is the earliest point in the start-up phase.
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Technology industry
The technology industry can include businesses such as high-tech manufacturing, communications services, and software and computer-related services. It can also include businesses such as biotechnology and other physical or material sciences.
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Venture capital
Venture capital firms have a pool of money that has been raised from their investors. They make equity capital investments (see Equity capital) in return for a share of the business and anticipated profit. Different firms specialize in different industries, and have different amounts they are willing to invest.
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