Glossary of Terms
Accredited Investor Defined under the National Instrument 45-106 Prospectus Exemptions , as: • an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes, but net of any related liabilities, exceeds $1,000,000; • an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000; • an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; • an individual who, either alone or with a spouse, has net assets of at least $5,000,000; [or] • a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements. Advisory Board A group of external advisors to a private equity group or portfolio company. Advice provided varies from overall strategy to portfolio valuation. Less formal than a board of directors. Allocation The amount of securities assigned to an investor, broker or underwriter in an offering. An allocation can be equal to or less than the amount indicated by the investor during the subscription process, depending on market demand for the securities. Angel Financing Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing. Angel Group A formal or informal assembly of active Angel investors who cooperate in some part of the investment process. Key characteristics of an Angel group are: control by member Angels (who manage the entity or have control over the entity’s managers), and collaboration by member Angels in the investment process. Angel Investing An Angel investor is an individual who makes direct investments of personal funds into a venture, typically early-stage businesses. Because the capital is being invested at a risky time in a business venture, the Angel must be capable of taking a loss of the entire investment, and, as such, most Angel investors are high net worth individuals. Government regulations require that these individuals be Accredited Investors.
106 A Practical Guide to Angel Investing
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