If I tell you: “VC, BFT and CII”, do you understand me? Thanks to this article, you will understand the main acronyms used in the world of fundraising.
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Fundraising, when the anglicism invades us.
1- Love money. Literally : “love money”. Who better to invest in a startup than family or friends ? When you start a project, “love money” can be a powerful lever to raise funds. Don’t be afraid to solicit your close circle at first. Indeed, they will be more inclined to finance your startup because the trust capital is already installed.
2- PE = Private Equity aims to invest in unlisted companies during their different development phases. In fact, private equity includes :
Seed capital (need to finance research and development).
Venture capital (need to finance start-up).
Development capital (the company is already profitable and needs to finance its operating cycle).
Transmission capital (need to finance the transmission of a company with or without leverage).
Pre-listing capital (need to finance the company before its listing on the stock exchange)
Turnaround capital (need to buy out companies in difficulty).
Finally, the most common form of private equity is venture capital.
3- VC = Venture Capital in English or “fonds de capital risque” in French. Venture capital funds bring together large financial investors, called Limited Partners*. The objective is to invest in the start-up and development of innovative start-ups that could become unicorns*. They will be able to benefit from the increase in value of the shares and resell their shares between 3 and 7 years later with a capital gain.
4- LP’s = Limited Partners. This is a term specific to the investment sector. LP’s can be :
Firstly, legal entities such as institutions : financial institutions, state agencies, large groups, pension funds, foundations, industrial investors…
Secondly, natural persons such as individuals: any person with significant financial assets.
5- BA = The term “business angel” comes from the term “angel investor” and characterizes people who help companies with their financing and development needs. Unlike venture capital funds that bring together several large financial investors, Business Angels are individual investors who invest their own money in startups that may become unicorns*. They are often company executives or former entrepreneurs with experience in business creation, who wish to help other entrepreneurs to give birth to their project. Thus, the amounts invested will often be lower than the amounts invested by VC funds which have a greater financial impact due to their grouping.
Did you say “unicorn” ?
6- Unicorn = In the world of fundraising, a unicorn is a startup whose valuation is equal to or greater than 1 billion dollars and is not listed on the stock exchange. Indeed, we are talking about startups whose growth is so fast that they can raise millions of euros in a single round of financing to continue their development. This term was initially reserved for American companies, but it has since been broadened to designate any innovative company that has the following characteristics: It must have an activity marked by innovation, propose a disruptive offer, ultra-fast growth financed by external funds as well as a valuation of more than one billion euros within 10 years of the company’s creation.
The main acronyms of grants, competitions and scholarships for fundraising
(non exhaustive list)
7- BFT = The French Tech Grant is a grant from BPIfrance (Public Investment Bank of France) that aims to support innovative companies less than one year old, with less than 50 employees and with a turnover of less than 10 million euros. Aid of up to €30,000 on average is granted.
8- JEI (Jeune Entreprise Innovante) = The Young Innovative Company status allows companies that have been in existence for less than 8 years and that spend 15% of their costs on R&D to benefit from tax relief and social security exemptions.
9- CIR (Crédit d’impôt Recherche) = The Research Tax Credit is a tax measure set up by the State to support and accompany companies that invest in research and development. It allows innovative companies to finance up to 30% of their R&D expenses. The latter must be less than 100 million euros. The CIR is directly deducted from corporate income tax or income tax. It can be applied to projects involving the design of a prototype, the production of a prototype or the pilot installation of a new product.
10 – CII (Crédit d’Impôt Innovation) = Like the CIR, the Innovation Tax Credit allows innovative companies, which commit up to 20% of their expenses in research and development, to benefit from tax breaks.
Thanks to these 10 main fundraising acronyms, you now have a solid foundation for understanding the language of fundraisers.
Finally, if you want to better understand the fundraising process, read our last article. You’ll become an ace fundraiser.
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