Glossary
Private-market glossary
266 terms from the private markets — secondaries, valuation, fund structures, fraud, and the retirement bridge — defined without the jargon and linked to the articles that teach them.
0–9
2-and-20
Shorthand for a common private-fund fee structure: a 2% annual management fee plus 20% of profits. See also fee stacking.
409A valuation
An independent appraisal of a private company’s common stock, required to set option strike prices for tax purposes. Typically well below the preferred-share headline price. Deep dive.
83(b) election
A tax filing that lets a recipient of restricted stock pay tax on its value at grant rather than as it vests. Must be filed within 30 days of grant — no extensions.
A
Accredited investor
An investor meeting income, net-worth, or professional-license thresholds that permit participation in most private offerings. Explained.
Accumulation trust
A trust that may retain retirement-account distributions rather than passing them straight to beneficiaries; stronger control, but retained income is taxed at compressed trust rates.
Affinity fraud
Investment fraud that spreads through trusted communities — congregations, professional groups, friend circles — using shared identity in place of diligence.
Allocation
The amount of an offering made available to a specific investor. Fake ‘excess allocations’ in famous companies are a classic scam premise.
Alternative investments
Assets outside public stocks, bonds, and cash: private equity and credit, real estate, hedge funds, digital assets, collectibles. The overview.
Angel investor
An individual who invests personal capital in very early-stage companies, typically before institutional venture rounds.
Anti-dilution protection
Terms that improve earlier investors’ conversion rates when a company later sells shares at a lower price. See weighted average and full ratchet; how it bites.
As-converted
A way of counting ownership as if all preferred stock, options, and convertibles were converted to common shares — the basis for ‘fully diluted’ percentages.
Ask
The price at which a seller offers to sell. The gap between bids and asks — the spread — measures how far apart the market sits.
Asset class
A group of investments with broadly similar characteristics and behavior, such as public equities, private equity, real estate, or cash.
Assignment
The legal transfer of a contract interest — such as an LP interest or promissory note — from one holder to another, usually requiring consent.
Audit trail
The complete record of who did what, when, on an account or transaction — the paper (or database) history that makes disputes resolvable.
B
Backfilled history
Index or track-record data computed retroactively, after the methodology was chosen. Assembled knowing how the story ended; treat as marketing.
Basis (cost basis)
What you paid for an asset, adjusted per tax rules. Gain or loss at sale is proceeds minus basis — undocumented basis is the seller’s problem.
Benchmark
A reference standard — often an index — against which performance is compared. Private-market benchmarks inherit every caveat of estimated pricing.
Beneficial ownership
The natural persons who ultimately own or control an entity. Private-market onboarding maps this ownership chain; the Investor Passport stores it once and reuses it.
Beneficiary designation
The account form naming who inherits a retirement account. It overrides the will, which is why keeping it current matters more than most estate documents.
Bid
The price a buyer offers to pay. A live bid is real intention, not a completed trade.
Bid-ask spread
The gap between the highest bid and lowest ask. Wide spreads signal thin markets and make midpoint ‘prices’ unreliable.
Block trade
A single transaction in a large quantity of shares, negotiated privately with controlled information flow. How it works.
Blocker corporation
A corporate entity placed between a tax-sensitive investor (such as a retirement account) and an operating investment, commonly used to intercept UBIT exposure.
Board consent
Approval by a company’s board required for certain actions — including, at many private companies, any transfer of shares.
Bootstrapping
Funding a company from revenue and founders’ resources rather than outside capital.
Bridge round
Interim financing intended to carry a company to a larger round or milestone, often structured as convertible notes or SAFEs.
Broker-dealer
A firm registered to buy and sell securities for clients or its own account; registration status is checkable in public regulator databases.
Burn rate
How fast a company spends cash, usually monthly — the numerator of runway.
Bylaws
A corporation’s internal operating rules — often the home of transfer restrictions that govern whether and how shares can be sold.
C
Cap (tender cap)
The maximum total a tender’s buyer will purchase; demand beyond it triggers proration.
Cap table (capitalization table)
The master record of who owns what in a company: shares, options, warrants, and convertibles by holder and class.
Capital call
A fund’s demand that investors deliver a portion of their committed capital, on notice periods defined in the fund documents.
Capital gain
Profit from selling an asset for more than its basis; long-term (held over a year) and short-term gains are taxed differently.
Carried interest (carry)
The share of a fund’s profits — commonly 20% — paid to its managers as performance compensation.
Change of circumstance
An event — a new address, citizenship, ownership change, or expired document — that can invalidate a previously verified credential and trigger a refresh.
Checkbook control
A self-directed IRA structure in which the account owns an LLC that the owner manages directly, trading custodial process for transaction speed and self-managed compliance.
Clawback
A provision requiring return of previously paid carry or compensation if later results don’t support it.
Cliff
The initial period of a vesting schedule — commonly one year — before any equity vests at all.
Closing
The moment a transaction completes: documents effective, funds delivered, ownership transferred.
Co-investment
Investing directly alongside a fund in a specific deal, typically at reduced or no fee, offered to select LPs.
Collectibles
Tangible items such as art, antiques, gems, and most coins — a category retirement accounts are specifically barred from holding.
Common stock
The basic ownership share of a corporation, standing behind all preferences in a sale or liquidation. What employees typically hold.
Comparables (comps)
Valuation by reference to similar companies’ metrics — a modeling input, weakest tier in the pricing hierarchy.
Concentration risk
The danger of one position dominating a portfolio’s outcome — the honest core worry when private shares sit in retirement money.
Conduit trust
A trust that must pass retirement-account distributions straight through to its beneficiary; simpler taxation, protection that ends at the distribution.
Consent (transfer consent)
A company’s formal approval of a share transfer, generally required by private-company documents before any secondary sale settles.
Consent grant
Your explicit, revocable permission to release specific Passport records to a specific recipient for a specific purpose. Nothing is shared by default.
Convertible note
A loan that converts into equity at a future financing, usually with a discount or valuation cap as compensation for early risk.
Counterparty risk
The risk that the other side of a transaction fails to perform — the risk custody settlement is designed to remove.
Cram-down
A financing on terms so dilutive that non-participating existing holders are severely diminished; often accompanies rescue rounds.
Crowdfunding
Raising capital in small amounts from many investors through registered online platforms under specific securities exemptions.
Custodian
The regulated institution that holds title to assets for an account’s benefit, executes directed transactions, and reports to tax authorities. Role in retirement accounts.
Custody settlement
Completing a trade inside custody so that shares and funds move only together — delivery versus payment applied to private assets.
D
Data minimization
Sharing a verified conclusion rather than the underlying document — for example, “accredited: yes” instead of your brokerage statements.
Data room
A controlled repository of company documents opened to vetted counterparties during diligence, usually under NDA.
Deal flow
The stream of investment opportunities reaching an investor or platform; quality of flow drives quality of portfolio.
Default (on a capital call)
An investor’s failure to fund a committed call, triggering remedies in fund documents ranging from interest to forfeiture.
Delivery versus payment (DvP)
Settlement discipline in which the asset and the money exchange simultaneously — neither side wires first and hopes.
Digital assets
Cryptocurrencies, tokens, and tokenized instruments; custody-eligible in some accounts, and a frequent costume for fraud.
Dilution
The reduction of existing holders’ ownership percentage when new shares are issued.
Discount for lack of control (DLOC)
The valuation haircut applied to minority stakes that cannot direct the business. The candy-store math.
Discount for lack of marketability (DLOM)
The valuation haircut for stakes that cannot readily be sold; compounds with the control discount.
Disqualified person
Under retirement-account rules: the owner, certain family members, fiduciaries, and entities they control — parties an account may not transact with.
Distribution
Money or property paid out — by a fund to its investors, or by a retirement account to its owner (a taxable event with its own rules).
Diversification
Spreading capital across positions so no single failure decides the outcome; the discipline concentration risk punishes you for skipping.
Down round
A financing priced below the previous round, triggering anti-dilution machinery and often heavier preference terms. What it reprices.
Drag-along rights
Terms letting majority holders compel minority holders to join an approved sale on the same terms.
Dry powder
Committed but not-yet-deployed capital — a fund’s unspent buying power.
Due diligence
Independent verification of an investment’s facts before committing: people, paper, track record, and money path. Why trust doesn’t count.
E
Early exercise
Exercising options before they vest (where permitted), often paired with an 83(b) election; converts option risk into stockholder risk early.
Earnout
Contingent sale consideration paid only if the sold business hits agreed milestones after closing.
Election window
The defined period in a tender offer during which holders decide whether and how much to sell. Tenders, explained.
Eligibility (tender)
The rules defining who may participate in a liquidity event — commonly based on holder type, tenure, and vested status.
Equity
Ownership interest in a company, in any form: common, preferred, options, RSUs, warrants.
Escheatment
The transfer of unclaimed property to the state after dormancy periods — the eventual fate of forgotten accounts nobody claims.
Escrow
Funds or assets held by a neutral third party until contractual conditions are met — the minimum settlement protection for private deals.
Evidence artifact
A document or authoritative record — an ID, trust agreement, or bank verification — that supports a claim in your profile.
Exercise
Converting an option into shares by paying the strike price; a decision with tax consequences that deserve advice beforehand.
Exercise window
How long an option can be exercised after employment ends — classically 90 days, extended at some companies.
Exit
The event that converts an investment into money: acquisition, IPO, buyback, or secondary sale.
Extension round
Additional investment on (roughly) the prior round’s terms, extending runway without repricing.
F
Fair market value (FMV)
The price a willing, informed buyer and seller would agree on. For private assets in retirement accounts, a number the owner must supply annually. Reporting duty.
Family office
A private organization managing one family’s wealth, investments, and affairs; a common institutional buyer of secondaries.
FBO titling
Asset titling ‘for the benefit of’ an account — e.g., custodian FBO owner’s IRA — the format that keeps account-owned assets legally the account’s.
Fee stacking
Layers of fees compounding across structures — e.g., fund-of-funds fees atop underlying fund fees. Worked arithmetic.
Fiduciary
A party legally bound to act in another’s best interest. A directed custodian is deliberately not one for investment selection.
Flat round
A financing at the same price as the prior round — no markup, no markdown.
Follow-on investment
An additional investment into a company by an existing investor in a later round.
Forward contract
An agreement to transfer shares at a future date or event. In private markets, often used to dodge transfer restrictions — with enforceability risk to match.
Founder shares
Common stock issued to founders at formation, typically subject to vesting.
Fractional interest
Partial ownership of a single asset — a percentage of a property or block — with valuation discounts and transfer questions of its own.
Full ratchet
The severe anti-dilution formula: earlier preferred reprices entirely to the new lower round price, maximizing dilution of common.
Fully diluted
Share count assuming every option, warrant, and convertible becomes common stock — the denominator honest ownership math uses.
Fund of funds
A fund whose portfolio is other funds — diversification and access, purchased with a second fee layer.
Funding round
An organized sale of new shares by a company to raise capital — seed, Series A, B, and onward.
G
Gate
A cap on how much of a fund can be redeemed in a period, converting ‘quarterly liquidity’ into a queue when demand spikes. The mechanics.
General partner (GP)
The managing entity of a fund partnership: makes decisions, bears management duties, earns carry.
General solicitation
Public advertising of a private offering — permitted under specific rules that then require verified (not self-certified) accreditation.
GP commitment
The fund manager’s own money invested in its fund — skin in the game LPs look for.
Grant
The issuance of equity compensation — options, RSUs, restricted stock — to an employee or advisor, defined by a grant date, amount, and vesting terms.
Gray market
Unofficial trading that occurs outside sanctioned channels — forwards, side deals, and unconsented transfers a company neither sees nor controls.
Growth equity
Investment in relatively mature private companies scaling proven models — between venture and buyout in risk and style.
H
Haircut
A percentage reduction applied to a value — for risk, illiquidity, or seniority — in pricing or collateral contexts.
Hedge fund
A privately offered fund pursuing flexible strategies, typically with performance fees and the liquidity mechanics (lockups, gates) that flexibility requires.
Holding period
How long an asset has been owned; drives long- vs short-term tax treatment and eligibility for certain exemptions.
Hurdle rate
The minimum return a fund must earn before performance fees begin.
I
Illiquidity
The inability to convert an asset to cash quickly at a fair price — the defining cost, and compensated risk, of private markets.
In-kind distribution
Distributing an asset itself (a deed interest, shares) rather than cash — valued at FMV on the date, taxable like cash, paperwork-heavy.
Incentive stock option (ISO)
A tax-favored employee option type with strict rules; exercises can trigger alternative-minimum-tax consequences worth advice in advance.
Index
A rule-based summary number representing a market segment. Private-market versions are editorial by construction. What one can be.
Indication of interest (IOI)
A non-binding statement that a buyer is interested at indicated terms — the opening move of a block process.
Indicative price
An estimate of where a trade might clear, built from available evidence. A reference point, never an executable quote. Exactly what it means.
Information asymmetry
When one side of a trade knows materially more than the other — the default condition improvised private deals leave uncorrected.
Information rights
Contractual rights to receive company financials and updates, typically granted to significant investors.
Initial public offering (IPO)
A company’s first sale of shares to the public, after which its stock trades on an exchange.
Inside round
A financing funded by existing investors only — supportive, or a sign outside money passed; context decides.
Institutional investor
A professional investing organization — pension, endowment, fund, insurer — transacting at size under mandate.
Interval fund
A registered fund holding illiquid assets that offers periodic, capped repurchases rather than daily redemption.
Investor Passport
A reusable, investor-controlled profile of verified identity, entity, ownership, accreditation, tax, and banking information, shared across offerings and accounts and authorized per record. Learn more.
IRA (individual retirement account)
A tax-advantaged personal retirement account; the self-directed variety can hold alternative assets through a qualified custodian.
Issuer
The company (or entity) whose securities are being offered or traded.
J
J-curve
The typical private-fund return pattern: negative early (fees, immature investments), positive later as exits arrive.
K
K-1 (Schedule K-1)
The tax form partnerships use to report each investor’s share of income and loss — famously late, routinely requiring filing extensions. The paper trail.
Know your business (KYB)
The entity equivalent of KYC: verifying a company, trust, or fund’s formation, good standing, and ownership before it can transact.
Know your customer (KYC)
Identity verification obligations on financial platforms — who you are, before what you’d like to do.
L
Last round price
The per-share price of a company’s most recent financing — evidence about preferred stock, often misread as the value of common.
Lead investor
The investor who negotiates a round’s terms and typically takes the largest allocation, setting the price others join at.
Ledger (cap-table ledger)
The authoritative electronic record of share ownership; in modern private companies, the ledger entry is the ownership.
Letter of intent (LOI)
A mostly non-binding outline of deal terms that frames the binding documents to follow.
Leverage
Investing with borrowed money, amplifying both outcomes; in retirement accounts, debt must be non-recourse and can trigger UDFI.
Limited partner (LP)
A fund investor with limited liability and no management role — capital in, decisions out.
Liquidation preference
Preferred stock’s right to receive a defined amount before common receives anything in a sale. The waterfall.
Liquidity
The ability to convert an asset to cash quickly without materially moving its price.
Liquidity event
An occurrence that lets holders convert equity to cash: acquisition, IPO, tender offer, or organized secondary.
Liquidity premium
The extra expected return investors demand for tying money up — private markets’ core bargain. The white paper.
Liquidity program
A company-organized system of recurring selling opportunities for shareholders — tenders and windows on a calendar. Operator’s guide.
Liquidity window
A scheduled period during which a liquidity program accepts transactions.
Lockup
A period during which shares cannot be sold — contractual after IPOs, structural in funds. With gates and side pockets.
LP interest
An investor’s stake in a fund partnership — transferable only by assignment with consent, and custody-eligible as an alternative asset.
M
Management fee
The recurring fee (commonly 1.5–2.5% annually) a fund charges on committed or managed assets, regardless of performance.
Marketability
How readily an asset can be sold — the quality whose absence the DLOM prices.
Marks (marked value)
A holder’s recorded estimate of an asset’s current value between transactions; stale marks masquerade as stability.
Maturity (note)
The date a loan’s principal comes due.
Mezzanine financing
Junior debt or preferred capital between senior loans and equity — higher yield for standing closer to the loss.
MFN clause (most favored nation)
A term guaranteeing an investor treatment at least as good as any other investor receives.
Minimum investment
The smallest check an offering accepts.
Minority interest
A stake below control. Worth less than its pro-rata share of the whole, for reasons with names. Why 49% ≠ 49%.
Model-based pricing
Estimating value from comparables, multiples, or market movements when transaction evidence is absent — the bottom of the input hierarchy, and honest only when labeled.
Money path
Where funds actually travel in a transaction. Legitimate deals settle through custody or escrow; fraud settles through someone’s personal account.
N
NDA (non-disclosure agreement)
A confidentiality contract that opens diligence conversations; standard first paper in block processes.
Net asset value (NAV)
A fund’s assets minus liabilities, usually per unit — the number periodic fund reporting revolves around.
Net worth test
One accreditation path: net worth above a defined threshold, excluding the primary residence.
Non-accredited investor
An investor below accreditation thresholds; most private offerings can include few or none.
Non-recourse loan
Debt secured only by the financed asset, with no personal guarantee — the only kind a retirement account may generally use.
Notice period
The advance warning required before a redemption or capital movement — a quiet but binding part of fund liquidity terms.
O
Offer price
The stated per-share price of a tender or offering, along with the basis on which it was set.
Offering memorandum
The disclosure document of a private offering: terms, risks, conflicts, and use of proceeds. Coherent ones exist; missing ones are answers.
Operating agreement
The governing document of an LLC — where transfer, consent, and management rules for LLC interests live.
Option
The right, not obligation, to buy shares at a fixed strike price for a defined period — the classic startup equity instrument.
Option pool
Shares reserved for employee equity grants, refreshed periodically; its size dilutes everyone and is negotiated in every round.
Out-of-band verification
Confirming instructions through a channel you initiated — calling a number you found yourself — before moving money. Thirty seconds that defeats most impostures. Why.
Oversubscription
Demand exceeding an offering’s or tender’s capacity, triggering proration.
P
Pari passu
On equal footing — preferences of the same rank sharing proportionally rather than stacking.
Participating preferred
Preferred stock that takes its preference and then also shares in remaining proceeds — the ‘double dip,’ sometimes capped.
Pass-through entity
A structure (partnership, most LLCs, S corps) whose income is taxed on owners’ returns rather than at the entity.
Phantom equity
Contractual payments that mimic equity value without issuing shares — compensation economics, no cap-table entry.
Politically exposed person (PEP)
A person in a prominent public role who warrants extra scrutiny under anti-money-laundering rules. Screening for PEP status is part of onboarding.
Portfolio company
A company a fund has invested in.
Post-money valuation
Company value immediately after a round: pre-money plus new capital.
Pre-emptive rights
Existing investors’ right to buy into future rounds to maintain their percentage.
Pre-IPO
Describing a private company plausibly headed toward public listing — and the adjective most abused in retail fraud. The fake allocation.
Pre-money valuation
Company value immediately before new capital in a round.
Preference stack
The cumulative liquidation preferences across all preferred rounds — the total that exits must clear before common participates.
Preferred stock
Investor stock carrying preferences and rights common lacks: liquidation priority, anti-dilution, sometimes participation and vetoes.
Price discovery
The process by which trading and negotiation reveal what an asset is worth; thin markets discover slowly and noisily.
Primary transaction
A company selling new shares to raise capital — contrast with secondary.
Private credit
Lending arranged outside banks and public bond markets — direct loans, notes, and credit funds.
Private equity
Ownership investment in private companies, from venture through buyouts; colloquially, the buyout end of that spectrum.
Private markets
The universe of investments transacted by contract rather than on exchanges. Start here.
Private placement
A securities offering exempt from public registration, sold to qualifying investors under rules like Regulation D.
Pro-rata rights
An investor’s right to invest in future rounds in proportion to current ownership — the follow-on version of pre-emptive rights.
Prohibited transaction
A retirement-account transaction with a disqualified person or for the owner’s current benefit — the account-killing category of self-dealing.
Promissory note
A written promise to repay a loan on defined terms; an investable, custody-eligible asset when properly documented.
Proration
Scaling back everyone’s accepted amount proportionally when a tender or offering is oversubscribed.
Put option
The right to sell an asset at a set price — in private terms, sometimes negotiated as a minority holder’s exit protection.
Q
Qualified custodian
A bank, trust company, or approved institution eligible to hold client or retirement assets of record. What one actually does.
Qualified purchaser
A higher wealth standard than accreditation ($5M+ in investments for individuals), unlocking certain fund types.
Qualified small business stock (QSBS)
Stock in eligible small C corporations that can carry substantial capital-gains exclusions when strict holding and issuer tests are met.
R
Reasonable steps (verification)
The Rule 506(c) standard requiring an issuer to take affirmative steps to verify accredited status — not simply accept an investor’s word.
Recovery scam
Advance-fee fraud targeting prior fraud victims with promises to retrieve lost funds. Paying money to recover money is the scam. Fraud’s second act.
Recurring tender
A liquidity program run on a published calendar rather than as a one-off event — predictability as a retention feature.
Redemption
Withdrawing capital from a fund under its liquidity terms — subject to notice periods, gates, and lockups.
Refresh grant
Additional equity granted to existing employees to offset vesting completion and dilution — the maintenance dose of equity compensation.
Registered investment adviser (RIA)
A firm registered to give investment advice for compensation, owing fiduciary duties to clients.
Regulation D
The rule set under which most U.S. private placements are sold, defining who may buy and how offerings may be marketed.
Reliance letter
A signed statement from a qualified reviewer confirming an investor’s accredited status, which a sponsor can rely on for a Rule 506(c) offering.
Reliance package
A point-in-time bundle of credentials, evidence, and approvals presented to a sponsor or custodian, showing exactly what was verified and when.
Required minimum distribution (RMD)
The annual withdrawal tax-deferred retirement accounts must make after a statutory age — calculated from prior year-end value, illiquid or not.
Restricted stock
Shares issued subject to vesting or transfer restrictions; the instrument the 83(b) election exists for.
Restricted stock unit (RSU)
A promise of shares upon vesting — no strike price, no exercise decision, tax at delivery. The later-stage successor to options.
Right of first refusal (ROFR)
A company’s (or designee’s) right to buy shares on the same terms before an outside buyer can — the standard 30-day speed bump in secondaries.
Rollover
Moving retirement money between accounts. Direct trustee-to-trustee transfers avoid the taxable pitfalls of the 60-day variety.
Roth IRA
An IRA funded with after-tax dollars offering tax-free qualified growth and withdrawals — and no lifetime RMDs for the owner.
Round
A discrete financing event: pre-seed, seed, Series A/B/C and beyond, each with its own price and terms.
Rule 144
The public-market rule governing resale of restricted securities — relevant to private holders mainly at and after an IPO.
Runway
How long current cash lasts at the current burn rate — the countdown financings exist to reset.
S
SAFE (simple agreement for future equity)
A contract converting to shares at a future round, without interest or maturity — seed-stage standard kit.
Sanctions screening
Checking an investor against government sanctions lists. A clear result is time-stamped, not permanent — it is re-run over the life of the relationship.
Secondary market
Where existing private securities change hands between investors — organized or improvised. The case for structure.
Secondary transaction
A sale of already-issued shares by an existing holder; the company receives nothing, the holder receives liquidity. The lifecycle.
Section 408
The tax-code section establishing IRAs — the statutory chassis every ‘self-directed’ account still runs on.
Securities
Tradable financial instruments representing ownership, debt, or rights — and the legal category that triggers investor-protection law.
See-through trust
A trust transparent enough under tax rules to be treated as its human beneficiaries for retirement-account distribution purposes. Design guide.
Seed round
A company’s first organized financing, funding the search for product-market fit.
Selective disclosure
Releasing only the specific fields a recipient needs, rather than your whole profile.
Self-dealing
Using a fiduciary position or restricted account for personal benefit — the conduct prohibited-transaction rules exist to stop.
Self-directed IRA
An IRA at a custodian that permits owner-chosen alternative assets. The owner directs; the custodian executes and reports.
Seniority (preference)
The order in which preference layers are paid — later rounds often rank ahead of earlier ones (‘stacked’) rather than equally.
Series (A, B, C…)
Labels for successive preferred rounds, each a distinct share class with negotiated rights.
Settlement
The completion of a trade: asset delivered, payment made, records updated. Where improvised deals fail and structured ones don’t.
Settlement risk
The exposure created between payment and delivery — eliminated by DvP, monetized by fraud.
Share certificate
The paper (now mostly electronic entry) evidencing share ownership; in private companies, the ledger is the truth.
Share class
A category of stock with defined rights — common, Series A preferred, and so on. Evidence about one class prices that class, not others.
Side letter
A private agreement giving a specific investor terms beyond the fund’s standard documents.
Side pocket
A fund segregating an unsellable or unpriceable asset; your share of it stops being redeemable until the asset resolves.
Source of funds
Where the money for an investment comes from. Documenting it is part of anti-money-laundering review.
Source tier
A label ranking the evidence behind a published price — completed trades, live interest, round terms, appraisals, models. The honesty layer of pricing.
Special purpose vehicle (SPV)
An entity formed to hold a single investment, letting many investors share one position — one line on the cap table, many owners behind it.
Spread
See bid-ask spread; in thin markets, the spread is the honest summary and the midpoint is a compromise.
Staleness
The age of pricing evidence. A price built on months-old trades deserves visibly less confidence — and honest displays say so.
Stock transfer agreement
The contract executing a secondary sale of shares: parties, price, representations, and conditions.
Strike price (exercise price)
The fixed price at which an option converts to shares — set from the 409A at grant.
Subscription agreement
The contract by which an investor commits to a fund or offering, with representations about eligibility and identity.
Survivorship bias
Distortion from measuring only what survived — indexes and track records that quietly drop failures flatter themselves.
Sweat equity
Value contributed through labor rather than money — and, inside a retirement account, a contribution the rules don’t permit.
T
Tag-along rights
Minority holders’ right to join a majority sale on the same terms — protection against being left behind.
Ten-year rule
The requirement that most non-spouse beneficiaries empty inherited retirement accounts within ten years — the clock that makes inherited illiquidity stressful.
Tender offer
A structured offer to purchase shares from existing holders at a stated price within a window. Explained.
Term sheet
The non-binding summary of a financing’s proposed terms that frames definitive documents.
Titling
Whose name legally owns an asset. The most common, most preventable error in account-held investing. The detail that breaks deals.
Tranche
A slice of a transaction or financing delivered separately — settlement in stages at block scale, funding in stages in rounds.
Transfer agent
The party maintaining an issuer’s official ownership register — the entity that can actually confirm shares exist.
Transfer restrictions
Contractual limits on selling private shares: consent requirements, ROFRs, outright prohibitions. Read before agreeing to sell.
Trust (estate)
A legal arrangement holding assets under a trustee’s management for beneficiaries — an heir, a shield, or both, depending on design.
U
UBIT (unrelated business income tax)
Tax owed by tax-advantaged accounts on income from active business activities they hold.
UDFI (unrelated debt-financed income)
The UBIT species triggered by debt-financed investment income — the tax that follows leverage into an IRA.
Underwriting (lending)
Evaluating a borrower and collateral before lending — the discipline that separates note investing from hopeful wiring.
Unicorn
A private company valued at $1 billion or more — a milestone of preferred-share pricing, not a guarantee of anything.
Unregistered securities
Securities sold under exemptions rather than public registration — legal in private placements, a red flag when offered to strangers.
Use of proceeds
What an offering says the raised money is for — a disclosure worth comparing against behavior.
V
Valuation
An estimate of worth. Which estimate — round price, 409A, model, bid — matters more than the number. Not a sale price.
Valuation cap
A convertible instrument’s maximum conversion valuation — early investors’ protection against paying growth-round prices.
Venture capital
Equity investment in early-stage, high-growth companies, accepting many losses for occasional outsized wins.
Venture debt
Loans to venture-backed companies, typically alongside equity rounds, often with warrants attached.
Verification
Independently confirming facts — identity, accreditation, shares, wire details — before acting on them. The habit fraud cannot survive.
Verified credential
A signed assertion issued after a defined verification process — distinct from raw profile data or the documents behind it.
Vesting
Earning granted equity over time or milestones; unvested equity is a promise, not property.
Veto rights
Contractual power to block specified company actions, typically held by significant preferred investors.
W
Warrant
A right to purchase shares at a set price, typically issued by the company alongside financings or debt.
Waterfall
The strict order in which sale proceeds flow through preferences to common. Worked example.
Weighted-average anti-dilution
The moderate anti-dilution formula: conversion prices adjust proportionally to a down round’s size and price, not fully to it.
Wind-down
The orderly end of a fund’s life: final sales, last distributions (sometimes in kind), and dissolution.
Wire fraud
Inducing money transfers by deception — the federal offense most investment scams ultimately are; report fast, recall windows are short.
Withdrawal
Taking money out — of a fund (see redemption) or a retirement account (see distribution); each word carries its own rulebook.
Y
Yield
Income return on an investment, expressed as a percentage of its price or principal.
Educational only. Definitions are general information, not investment, legal, or tax advice. InvestNow is a demonstration platform.