Deal flow: Deal flow refers to the number of quality startup companies and opportunities – deals – available for Venture Capital firms to invest in. Included in this would be only those companies that have intellectual property, and/or are “product-based” companies; services firms, projects, consulting companies and the like would not be considered part of the deal flow in Alberta.
Ecosystem: Ecosystem refers to the connectivity within Alberta’s VC community that allows technology entrepreneurs to access the capital, operational expertise and industry networks needed to grow.
J-curve: A J-curve depicts a trend that starts with a sharp drop and is followed by a dramatic rise. Due to the nature of venture investing and accounting practices for these investments, Venture Capital funds are likely to show a loss during the first half of their life as new funds draw capital. These losses normally reverse as a fund matures and as unrealized and realized gains increase over time. This is called a J-curve.
Limited Partner: Limited Partners are investors in a fund who provide capital to Venture Capitalists (General Partners); their liability is limited to the money they have invested. AEC invests as a Limited Partner in VC funds.
Pre-Seed and Seed funding: Pre-Seed or Seed funding is the first official equity funding stage. It typically represents the first official money that a business venture or enterprise raises. There are many potential investors in a seed funding situation: founders, friends, family, incubators, Venture Capital companies and more. One of the most common types of investors participating in seed funding is a so-called “angel investor”.
Series A funding: The first round after the seed stage is normally called Series A funding. In this round, it’s important to have a plan for developing a business model that will generate long-term profit. The investors involved in the Series A rounds typically come from more traditional Venture Capital firms.
Total Value to Paid In capital (TVPI): The investment multiple is also known as the Total Value to Paid-In (TVPI) multiple. It is calculated by dividing the fund’s cumulative distributions and residual value by the paid-in capital. It provides insight into the fund’s performance by showing the fund’s aggregate returns as a multiple of its cost basis.
Venture Capital: Risk capital provided by investors to startup firms with perceived growth potential. Venture Capital funds raise capital from external investors (Limited Partners) and are professionally managed by a General Partner.
Sources: Investopedia and AEC