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Enter, Stage, Right Pt.7 - Quiz and Jargon Buster

Enter, Stage, Right Pt.7 - Quiz and Jargon Buster

Unpacking company investment stages to help find your fit.

Part seven (of seven)

In the seventh and final article of our series, which unpacks the different stages of growing a business, we offer you a quick jargon buster and the opportunity to find out which type of environment – in terms of a company’s growth stage – would best suit you.

Before taking the quiz, though, make sure you’ve read all the articles in the series:

Investment Jargon Buster

IPO An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors.

Private Equity (PE) Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity.

SPAC A special purpose acquisition company (SPAC) is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. Also known as "blank check companies," SPACs have been around for decades. In recent years, they've become more popular, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019. In 2020, as of the beginning of August, more than 50 SPACs have been formed in the U.S. which have raised some $21.5 billion. [Sidenote: SPACs should also be jokingly coined "Special Purpose Arbitrage Companies" as the SPAC owners are trying to take a private company into the public markets and they take an average of 20% of the upside. Most of the recent SPACs have affected transactions at valuations that are significantly higher than what private investors would transact at. Therefore, watch out for SPAC bubbles as you might get popped!]

Unicorn status A unicorn company or start-up is a new business that is valued at more than $1 billion and is privately owned – meaning they aren't listed on stock exchanges. ... Unicorns may be rare, but decacorns – start-ups with a value of $10 billion – are rarer still.

Venture Capital (VC) Venture capital (VC) is a form of private equity and a type of financing that investors provide to start-up companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and any other financial institutions.



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