Business Finance Source Definitions
Seed capital: capital required to fund a business project before the product or service is marketed. Seed capital is often pivotal in high-tech projects to allow businesspersons to conduct surveys as well as research and development on prototypes that will become companies’ core business.

Venture (or risk) capital: equity invested temporarily in the form of shares of a company by a specialised firm in the hope of a return on investment (ROI) that is both large and speedy, on a par with the level of risk taken. Venture capital firms invest both in start-ups and growing businesses.

Business angels (informal venture capital): private individuals who invest part of their estate in start-ups in the form of venture capital and also contribute their personal managerial expertise.

Business Angels Networks (BANs): standing regional platforms that promote the matching of business angels with potential investees.

Early stage (or start-up) finance: equity invested in businesses that are past research and development but need additional funding to market their products and services.

Mezzanine: combination of equity and loans. Applicable interest rates are often comparatively high.

Financial package: a combination of different funding sources.

Corporate venturing:: venture capital invested by existing firms for the purpose of funding innoative businesses set up by their own staff or active in industries considered of strategic importance.

Grants: subsidies paid—without an obligation to refund—by public authorities to companies investing in a region for the purpose of facilitating their establishment or expansion.

Factoring: a technique whereby SMEs sell invoices to specialised firms.

Leasing: hire-purchase of capital goods.

Loans and debt: the main sources of funding for SMEs.
 

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