Equity Crowdfunding Terms – What You Need to Know
These equity crowdfunding terms are essential for anyone looking to invest or participate in equity crowdfunding campaigns. Here’s a brief summary and explanation of each term:
- Accredited Investor: An individual with a high income or net worth, meeting certain financial thresholds. They are considered experienced and are allowed to invest in private securities.
- Bootstrapped: Refers to a company that has grown without significant external investments.
- Bounce Rate: The percentage of visitors to a webpage or campaign page who leave without fully engaging with the content.
- CAGR (Compound Annual Growth Rate): The rate at which an investment grows annually, factoring in reinvested gains.
- Capital: The funds a company has for daily operations and growth.
- Donation Crowdfunding: A fundraising method where people donate without expecting anything in return.
- Lead Investor: The primary investor in an equity crowdfunding campaign who provides financial support and expertise.
- Non-Accredited Investor (Retail Investor): Individuals who do not meet the criteria of accredited investors, often able to invest smaller amounts.
- Private Company: A company not publicly traded on stock exchanges.
- Public Company: A company that has gone public through an Initial Public Offering (IPO) and trades on stock exchanges.
- Reward Crowdfunding: Investors receive products or services in exchange for their investment.
- ROAS (Return on Ad Spend): Measures revenue generated from targeted advertising campaigns compared to the cost of those ads.
- ROI (Return on Investment): Measures the profit earned from an investment relative to the initial investment.
- Securities: Tradable financial instruments, including equity and debt, used to raise capital.
- Unicorn: A privately-held company valued at over one billion dollars.
- Venture Capital (VC): Firms that invest in startups and small businesses with high potential for success.
Understanding equity crowdfunding terms will indeed help potential investors navigate the world of equity crowdfunding more effectively, make informed decisions, and avoid potential pitfalls. This knowledge ensures you can communicate and participate confidently in equity crowdfunding campaigns.
Another excellent reference for equity crowdfunding terms is here.
A broader equity crowdfunding guide is here.