Any person whose income exceeds $200,000 ($300,000 for joint income) for the last two years with the expectation of earning the same or a higher income in the current year or their net worth exceeds $1m or if they are a general partner, executive officer, or director for the company that is issuing the unregistered securities. This is a non-exhaustive list, please make sure to check whether you might fall under any other accreditation requirements with your legal counsel.

B

Blue Sky Laws/Fees

State-level, anti-fraud regulations that require issuers of securities to be registered and to disclose details of their offerings. Each state has their own regulations and fees.

C

Carry Fee, Carried Interest

Charged to investors in SPV or Fund based on the performance and return on investment. Through the Allocations platform, this is customizable by the Fund Manager and can differ by LP.

Commingling Funds

When a fiduciary, a person entrusted with the management of funds other than his or her own in trust, mixes trust money with that of others, the fiduciary is commingling funds and thereby breaching his or her fiduciary duty.

E

Exempt Reporting Advisor (ERA)

Investment advisor that makes investment recommendations and securities analysis. They are not required to register with the SEC.

F

Follow-On

A subsequent investment made by an investor who has made a previous investment in the company, generally a later stage investment in comparison to the initial investment.

Fund

A way of investing alongside other investors used to raise money to invest in multiple assets over a period of time.

Fund Manager

An individual or entity that manages the investment of money on its own behalf or on that of outside clients. General Partner might considered as Fund Manager as well.

FINRA (Financial Industry Regulatory Authority)

Private American corporation that acts as a self-regulatory organization which regulates member brokerage firms and exchange markets.

G

General Partner (GP)

Investors who carry all of the liability of their investment and assume day to day role of managing it.

K

KYC (Know Your Customer)

Component of AML that consists of verifying Fund Manager and/or investor identity.

K-1

Federal tax document used to report the income, losses, and dividends of a business' or financial entity's partners or an S corporation's shareholders. The Schedule K-1 document is prepared for each individual partner and is included with the partner's personal tax return.

L

Limited Partnership (LP)

Type of investment partnership in which partners have limited liability - they are not liable for business debts that exceed their initial investment. Such form is usually used for Funds.

M

Management Fee

Paid one time or periodically to fund manager and is also set by fund manager when forming investment vehicle (SPV).

P

Private Equity (PE)

Investment funds generally organized as limited partnerships (LP's), as well as limited liability companies (LLC's) as SPVs, that buy and restructure companies that are not publicly traded.

R

Recycling Funds

Option for Fund Manager to inject much needed short term capital into a fund through methods such as co-investments, borrowing from 3rd party lenders, and reinvesting cash received by fund from investments. Allocations allows fund managers this option whereas other competitors (AngelList) do not.

Regulation Crowdfunding (Reg CF)

Allows eligible companies to raise funds from the public by both accredited and unaccredited investors. All transactions under Regulation Crowdfunding must take place online through an SEC-registered intermediary- either a broker-dealer or a funding portal.

Resyndication

The sale of existing properties to new limited partners, so that they can receive the tax advantages that are no longer available to the old partners.

S

Syndicate

A VC fund made (pooling of assets) to make a simple investment. Synonymous with SPV.

SPAC (Specialty Purpose Acquisition Company)

Also known as a "blank check company" is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process.

SAFE (Simple Agreement for Future Equity)

An agreement between an investor and a company that provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment.

Side Letter

An agreement between the SPV or Fund and one particular investor to vary the terms of the limited liability company agreement or limited partnership agreement (as applicable) with respect to that particular investor (almost always to the benefit of the investor).

SPV (Special Purpose Vehicle)

Business vehicle that has a special limited purpose. Allows investors to pool (syndicate) funds to acquire and manage a specific asset or multiple assets.

Securities

Financial instruments that hold value (e.g., stocks, simple agreement for future equity, convertible promissory notes, bonds, mutual funds, other investments you can buy and sell).

Secondary

Investors purchase existing shares from shareholders in a company.

SEC (US Securities and Exchange Commission)

Large independent agency of the United States federal government that was created to protect investors, promote fairness in the securities markets, and share information about companies and investment professionals to help investors make informed decisions and invest with confidence.

SLUGs (State and Local Government Series)

Special non-marketable certificates, notes, and bonds offered to state and local governments as a means to invest proceeds from their own tax-exempt financing. Interest rates and maturities comply with IRS arbitrage provisions.

V

Venture Capital (VC)

Type of private equity financing that invests in a project where there is a substantial element of risk-typically new and emerging companies.

W

Warrant

A security that entitles the holder to buy the underlying stock of the issuing company at a fixed price called exercise price until the expiration date.

Disclosure

The information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction. Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors. Before making an investment be sure to consult your legal counsel and any other advisor.