Appendix C: Glossary of Terms
Early-stage risk capital
Funds invested in the initial phases of a startup’s development, including stages such as pre-seed, seed, and early Series A rounds. These investments typically carry high risk as they support startups before significant revenue or market traction.
Pre-seed capital
The earliest funding a startup receives, often from founders, friends, family, or angel investors. Pre-seed capital is primarily used to develop initial concepts, prototypes, conduct market research, and establish foundational business models.
Seed capital
Funding provided during the early growth phase of a startup, typically used to refine products, hire key personnel, engage initial customers, and prepare for larger investment rounds. Seed funding commonly involves angel investors or specialized early-stage venture capital firms.
Institutional capital
Investments made by professionally managed financial institutions such as pension funds, mutual funds, insurance companies, endowments, or large venture capital firms. Institutional capital generally participates in financing rounds from Series A onwards.
Flow-through shares
A Canadian tax-based financing mechanism enabling companies, particularly in sectors like natural resources or innovation, to pass eligible exploration or research expenses directly to investors. Investors then deduct these expenses from their taxable income, incentivizing investment.
Capital gains rollover
A tax strategy allowing investors to defer capital gains tax when proceeds from the sale of an asset are reinvested into similar qualified assets within a specified time frame. This mechanism encourages continued investment in specific asset classes or early-stage ventures.
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