A hedge fund is an entity that pools funds from members to invest largely in liquid assets using high-risk methods that have the potential to deliver high returns. Some of the more advanced tactics used by hedge funds include short selling, derivatives and leverage.

A follow-on offering, also known as a secondary offering, is a process by which a publicly-traded company raises additional capital by issuing and selling more shares of stock. This is in contrast to an Initial Public Offering (IPO), which is the process by which a privately-held company first becomes publicly traded by issuing and selling shares to the public for the first time.

The main reason for a company to conduct a follow-on offering is to raise additional capital for the business. The company can use the proceeds from the sale of the additional shares for various purposes, such as funding research and development, expanding operations, making acquisitions, paying off debt, or returning capital to shareholders through a dividend or share buyback.

Follow-on offerings can be done through various forms such as a public offering or a private placement. Public offerings are registered with the Securities and Exchange Commission (SEC) and made available for purchase by the general public, while private placements are typically done with a smaller group of accredited investors.

In a follow-on offering, existing shareholders of the company will often see a dilution in the value of their shares due to the influx of new shares into the market, which can increase the supply of shares and decrease the demand. Therefore, the company should have a clear plan on how to use the funds and how it will positively impact the company’s growth and profitability to maintain or increase the value of the existing shareholders.

View Full Answer Page: What is a Follow-on or Secondary Offering?

Family offices are privately-held wealth management advisory firms that typically service high net worth individuals and families. The goal of family offices is typically to both grow and transfer a family’s wealth from generation to generation. Unlike traditional wealth management firms, family offices typically offer an end-to-end solution for their clients and get involved in areas such as:

• Investments
• Donations and charitable giving
• Budgeting
• Wealth transfer to children and other family members
• Insurance
• Tax services

Restricted securities refer to securities that an investor acquires through a private sale by the issuing company which are typically subject to some type of resale limitations. Types of restricted securities include:

• Common Stock
• Preferred Stock
• Debt Securities (when applicable as not all debt is a security)
• Stock Options
• Stock Warrants

Restricted stock units (RSUs) are a form of equity compensation provided by an employer to its employees. They represent the right to receive shares of the employer’s stock at a future date, typically when certain conditions, such as continued employment or performance milestones, are met. Unlike stock options, which give the holder the right to buy shares at a specific price, RSUs are typically awarded outright to the employee, with no purchase required. They are “restricted” because they cannot be sold or transferred until the restrictions have been lifted. Upon the vesting of the RSU, it is converted into a certain number of shares of stock and the employee becomes a shareholder of the company.

The terms of RSUs, including the number of units awarded, the vesting schedule, and the restrictions on transferability, are typically set forth in a grant agreement or award agreement. The vesting schedule can be based on time, such as vesting over a period of several years, or on performance-based milestones, such as achieving certain revenue or earnings targets. Once the units vest, the employee becomes the owner of the underlying shares and may be able to sell or transfer them, depending on the terms of the grant agreement.

RSUs are considered a form of taxable income when they vest and the employee becomes the owner of the underlying shares. The employee will be required to pay taxes on the fair market value of the shares at the time they vest. The company may also be required to withhold taxes at the time of vesting.

There are different ways to account for Restricted Stock Units in the financial statement of the company, depending on the accounting standards used. But in general, the company will recognize an expense for the fair value of the RSUs on the grant date and will adjust it over the vesting period reflecting the service condition of the award.

Overall, Restricted Stock Units are a way for companies to align the interests of employees with those of shareholders by giving employees a stake in the company’s success. They can also be a valuable form of compensation for employees, providing them with a direct financial interest in the company’s performance and potential for appreciation in the value of the shares.

View Full Answer Page: What Are Restricted Stock Units (RSUs)?

Rule 144A is a method that companies can use to raise capital from institutional investors as well as investors outside of the United States. This rule requires that any investment from the United States be from institutional investors only. And for investors outside of the US, money can be raised from the general public using Regulation S.

A non-accredited investor is someone who does NOT meet the income or net worth requirements that the Securities and Exchange Commission has defined for an accredited investor.

In most cases, a non-accredited investor will:

1.  Net Worth – Have an individual or joint net worth of under $1 million (excluding their primary residence)

2. Income – Have income under the following in each of the prior two tax years:

• Under $200,000 per year individually
• Or under $300,000 per year jointly (with spouse or partner)

A mutual fund is a type of professionally managed investment fund where the fund manager will pool money from its members or shareholders to purchase a range of securities, such as stocks and bonds.

It is important to note that mutual funds are typically investing in many different companies and so they offer built-in diversification, which is often tied to lower risk to the investor.

Venture capital (VC) is a type of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been identified as having high growth potential or which have demonstrated evidence of having achieved or being on a path to achieving significant market traction. The goal of venture capital is to invest in companies that will generate a return through an initial public offering (IPO) or a strategic acquisition by another company.

View Full Answer Page: What is Venture Capital?

A bond is a financial instrument in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a fixed interest rate. The entity that issues the bond is the borrower (issuer), and the bond holder is the lender. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

Bonds are issued by companies, municipalities, and governments to raise capital. The issuer promises to pay the bondholder a fixed rate of interest (coupon) during the life of the bond and to repay the principal (face value) of the bond when it matures. The bond’s term, or maturity, can range from a few months to 30 years or more.

When an investor buys a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the bond’s face value when it matures. The bond’s interest rate, also called the coupon rate, is determined by the issuer at the time of issuance and is fixed for the life of the bond.

Bonds are generally considered to be less risky investments than stocks, but the risk of bond investment varies depending on the creditworthiness of the issuer and the bond’s terms. Government bonds, for example, are considered to be among the safest investments because they are issued by sovereign nations with the power to tax its citizens to repay bondholders. On the other hand, bonds issued by companies with poor credit ratings are considered to be high-risk investments.

Bonds can be traded on secondary markets, and their prices fluctuate based on interest rates and the creditworthiness of the issuer. When interest rates rise, bond prices fall, and vice versa.

In summary, bonds are a type of debt security that allows investors to lend money to an entity in exchange for regular interest payments and the return of the principal at maturity. They are considered to be less risky than stocks, but the risk varies depending on the creditworthiness of the issuer and the bond’s terms.

View Full Answer Page: What is a Bond?

An investment bank is a financial institution that assists companies and governments in raising capital by underwriting and issuing securities, and by acting as a broker or advisor in merger and acquisition activities. Investment banks also provide a wide range of financial services, such as providing market insights, helping to structure and price securities, and trading securities on behalf of clients.

One of the primary functions of an investment bank is to act as an underwriter, which means that they purchase securities from a company or government and then resell them to the public or to other investors. Investment banks also help companies and governments structure their securities offerings and determine the appropriate price for the securities.

Another important function of investment banks is to act as a financial advisor, providing advice and counsel to companies and governments on a wide range of financial matters, such as mergers and acquisitions, divestitures, and other strategic transactions. Investment banks also provide a variety of research and analytical services to clients, such as market and industry analysis, and financial modeling.

Investment banks also have a trading arm, where they buy and sell securities for their own account or for clients, and market making activities where they act as intermediaries between buyers and sellers of securities.

Investment banks are typically divided into two main categories: bulge bracket and middle market. Bulge bracket banks are the largest and most well-known investment banks and have a global reach, while middle market banks tend to focus on specific regions or industries.

In summary, an investment bank is a financial institution that assists companies and governments in raising capital by underwriting and issuing securities, and by acting as a broker or advisor in merger and acquisition activities. Investment banks also provide a wide range of financial services, such as providing market insights, helping to structure and price securities, and trading securities on behalf of clients.

View Full Answer Page: What is an Investment Bank?

A debt offering, also known as a bond offering, is the process by which an entity raises capital by issuing and selling bonds to investors. The proceeds from the sale of the bonds are used by the issuer to finance various projects, such as building a new facility, expanding operations, or refinance existing debt.

The debt offering process typically begins with the issuer hiring an investment bank or underwriting firm to help structure the bond offering and bring it to market. The investment bank acts as an intermediary between the issuer and potential investors, and is responsible for underwriting the bond offering, which means they purchase the bonds from the issuer and then resell them to investors.

The issuer will then file a registration statement with the Securities and Exchange Commission (SEC) and provide potential investors with a prospectus, which is a document that contains detailed information about the bond offering, including the terms and conditions of the bonds, the issuer’s financial condition, and the use of proceeds from the offering.

After the registration statement is cleared by the SEC, the investment bank will then market the bond offering to potential investors. The bond offering can be sold through a variety of channels, including public offerings, private placements, or a combination of both.

In a public offering, the bonds are sold to the general public through a network of securities dealers. In a private placement, the bonds are sold to a limited number of sophisticated investors, such as institutions or wealthy individuals, and are not generally available to the public.

In summary, a debt offering is a process by which an entity raises capital by issuing and selling bonds to investors. Investment banks act as intermediaries and help structure and market the bond offering to potential investors. The issuer provides detailed information about the bond offering through a prospectus, which is filed with the SEC. The bond offering can be sold through public offerings or private placements.

View Full Answer Page: What is a Debt Offering?

A convertible note, also known as a convertible debt or convertible bond, is a type of debt instrument that can be converted into equity at a later date. This means that the holder of the convertible note has the option to exchange the note for a specified number of shares of the issuer’s common stock at a pre-determined conversion price.

Convertible notes are typically issued by startups and early-stage companies that need to raise capital but want to delay the valuation of their company until a later date. The issuance of convertible notes allows companies to raise money now, while avoiding the burden and expense of pricing their equity.

The terms of a convertible note typically include the following:

• Principal amount: The amount of money that the issuer is raising through the sale of the note.
• Interest rate: The rate at which interest will accrue on the outstanding principal amount of the note.
• Maturity date: The date on which the outstanding principal amount of the note must be repaid.
• Conversion price: The price per share at which the note can be converted into equity.
• Conversion ratio: The number of shares of common stock that will be issued for each $1 of principal amount converted.

Convertible notes can be attractive to investors because they offer the potential for upside in the form of equity in the company, while also providing downside protection in the form of a fixed interest rate. However, the value of a convertible note depends on the future performance of the underlying stock, and if the stock price doesn’t increase, the value of the note to the investor can decrease.

View Full Answer Page: What is a Convertible Note?

A securities subscription agreement is a legal contract between an investor and a company that outlines the terms and conditions of an investment in the company’s securities, such as stocks or bonds. It is typically used in private placement transactions, where a company raises capital by issuing securities to a small number of accredited investors.

The subscription agreement is the formal document that details the terms of the investment, including the type and number of securities being purchased, the purchase price, the rights and obligations of the investor and the company, the conditions for closing the transaction, and any other relevant terms of the agreement.

The subscription agreement is typically signed by both the investor and the company, and it is considered binding once it is executed. It is also usually accompanied by other legal documents such as the private placement memorandum (PPM) which provides detailed information about the company, the securities being offered and the terms of the investment, and the articles of incorporation and bylaws of the company.

The subscription agreement is a key document in the private placement process and is used to define the rights, responsibilities and expectations of both parties, protect the interests of the investors and ensure compliance with the legal and regulatory requirements. It helps to ensure that the interests of the investors and the company are aligned, and that the terms of the investment are clear and enforceable.

View Full Answer Page: What is a Subscription Agreement?

An over-the-counter market (OTC market) is a decentralized market that allows parties to trade stocks, commodities and other instruments without the use of a broker or an exchange.

A “Simple Agreement for Future Equity” (SAFE) is a financing instrument that is designed to simplify the process of raising capital for startup companies. It is similar to a convertible note in that it allows investors to provide capital to a company in exchange for the right to receive equity at a later date, usually when the company raises a subsequent round of financing or achieves a liquidity event.

One key difference between a SAFE and a convertible note is that a SAFE does not accrue interest or have a maturity date, meaning that the investors do not have a guaranteed payout in the event that the company does not achieve certain milestones. Additionally, SAFEs are generally simpler to draft and execute than convertible notes, making them a more attractive option for early-stage companies that are looking to raise capital quickly.

A SAFE is often considered a more founder-friendly way of raising capital as SAFEs are simpler to use and don’t have interest payments. However, on the other side, SAFEs do not have any maturity date which means investors don’t have guaranteed return of their investment.

View Full Answer Page: What is a SAFE (Simple Agreement for Future Equity)?

There are four different types of crowdfunding: donation, debt, equity and rewards:

Donation Crowdfunding: When people give money to an organization in return for nothing. These campaigns are often focused around charitable causes or efforts that support some type of “greater good”.

Debt Crowdfunding: When people give money to an organization in the form of a loan. Money given under this format must be repaid by the organization at a specified interest rate and by a certain deadline.

Equity Crowdfunding: When people give money to a business in exchange for equity in the company. The two most popular formats of equity crowdfunding are Regulation A and Regulation CF.

Rewards Crowdfunding: When people give money to an organization in exchange for some type of reward. The reward could be something like a t-shirt or it could even be related to the product or service the organization provides.

An angel investor is an individual who provides capital to startup companies in exchange for ownership equity or convertible debt. Angel investors are typically high-net-worth individuals who are looking for higher returns on their investment than can be obtained from more traditional investments. They often have experience in the industry in which the startup is focused, and may provide mentoring or other support in addition to capital. Angel investing is typically considered higher risk than traditional investing, but also has the potential for higher returns.

View Full Answer Page: What is an Angel Investor?

In short, there is no difference between these two terms and they can be used interchangeably.

Looking for a definition of equity crowdfunding? View our article here: What is equity crowdfunding?

Advisory shares, also known as non-voting shares or Class B shares, are a type of stock that gives the holder the right to receive dividends and participate in the distribution of assets upon liquidation, but not the right to vote on matters related to the company. This means that the holders of advisory shares have a financial interest in the company but do not have a say in its management or direction. Advisory shares are typically issued to a select group of investors, such as family members or long-term advisors, and are intended to provide them with a stake in the company without diluting the voting power of the existing shareholders.

Advisory shares are similar to non-voting common shares, but they are often used in situations where the company wants to provide a financial stake to a specific group of people without giving them voting rights. They may be issued in addition to voting common shares, or as a separate class of stock altogether.

In accounting and financial statements, advisory shares are accounted for as part of the common shares outstanding. They are considered a liability in the balance sheet and the company can choose to account them as a liability or equity.

Overall, advisory shares can be a useful tool for companies to reward key advisors or family members with a stake in the company without diluting the voting power of the existing shareholders. It can also be a way to ensure that the company’s direction and management is controlled by those who are actively involved in its operations.

View Full Answer Page: What Are Advisory Shares?

The two main differences between preferred and common stock are:

1.  Common stock shareholders typically have voting rights whereas preferred shareholders do not have voting rights

2. Preferred stock is considered the first money out of the business. So whether you are talking about dividends being paid or even the sale of the company; preferred shareholders would be the first ones to be paid.

Stock options are a form of equity compensation that gives the holder the right to purchase shares of a company’s stock at a specific price (called the exercise or strike price) at a future date. The holder of a stock option has the right, but not the obligation, to buy the shares at the exercise price. There are two main types of stock options: incentive stock options (ISOs) and non-qualified stock options (NSOs).

Incentive stock options (ISOs) are options that are granted to employees and are eligible for special tax treatment under the Internal Revenue Code. If the holder of an ISO meets certain holding period and other requirements, they will not be subject to ordinary income tax when they exercise the option. Instead, they may be subject to capital gains tax when they sell the shares.

On the other hand, non-qualified stock options (NSOs) are options that are granted to employees, independent contractors, and directors, and are not eligible for the special tax treatment that ISOs receive. When the holder of an NSO exercises the option, they will be subject to ordinary income tax on the difference between the fair market value of the shares at the time of exercise and the exercise price.

Stock options are often granted as part of an employee’s compensation package. They can be used as a form of long-term incentive compensation, aligning the interests of employees with those of shareholders by giving employees a stake in the company’s success.

In accounting and financial statements, stock options are recorded as an expense, and the company will record an expense over the vesting period, reflecting the service condition of the award. This expense is calculated using the fair value of the options on the grant date, which is an estimate of the expected price of the underlying stock at the time of exercise.

Overall, stock options can be a valuable form of compensation for employees, providing them with a direct financial interest in the company’s performance and potential for appreciation in the value of the shares.

View Full Answer Page: What Are Stock Options?

An Initial Public Offering (IPO) is the process by which a privately-held company raises capital by issuing and selling shares of stock to the public for the first time. The shares of stock are made available for purchase by investors through a securities exchange, such as the NASDAQ or the New York Stock Exchange (NYSE).

The company going public will typically retain the services of an investment bank, which acts as an underwriter for the IPO. The underwriter’s role is to determine the offering price of the shares and to manage the process of selling the shares to the public.

Once the shares are sold, they begin trading on the open market, and investors can buy and sell them just like any other publicly traded stock. The company that goes public receives the proceeds from the sale of the shares, which it can use for business operations or to pay off debt.

Going public through an IPO can be a significant event for a company, providing it with access to large amounts of capital and increasing its visibility among investors. it also can lead to increased credibility, greater liquidity, and liquidity for its shareholders, also it can make it easier to attract and retain talented employees and managers.

However, an IPO also has its downsides, as the company is now subject to greater regulatory and compliance requirements, and it also exposed to greater scrutiny from investors and the public. Additionally, the company will have to share financial information regularly with the public and face pressure to meet earnings expectations.

View Full Answer Page: What is an Initial Public Offering (IPO)?

FINRA stands for the Financial Industry Regulatory Authority. FINRA is a not-for-profit American corporation that is not a government organization. FINRAs primary purpose is to regulate exchange markets and brokerage firms in an attempt to protect investors and ensure the integrity of these capital markets. The SEC oversees FINRA.

A stock transfer agent (also known as a transfer agent, share registry or transfer agency) manages the change in ownership of a company’s stock. In addition, the stock transfer agent is responsible for maintaining a record of ownership as well as paying distributions and dividends to individual investors, when applicable.

A Series A round is the first round of venture capital financing for a startup company. It typically follows the seed round, in which a company raises money from friends, family, and angel investors to develop a proof-of-concept and create a working prototype of the product.

In a Series A round, the company will raise capital from venture capital firms and/or institutional investors. These investors usually provide a larger amount of capital than angel investors and in return will receive a larger percentage of ownership in the company. The funds raised in a Series A round are typically used to develop the product further, establish the initial customer base, and set up the necessary infrastructure to scale the business.

The Series A round is considered a more significant funding round than the seed round, as it marks the point at which a company has validated its business model and has demonstrated traction with customers.
Companies are expected to show more detailed information and plan on the use of the funds, the growth of the company and the current state of the market.

In a Series A round, a company may raise several million dollars, valuing the company at tens of millions of dollars, which is significantly more than the valuation in a seed round. The investors in this stage are usually looking for a substantial return on investment, usually, in the form of a buyout or IPO.

View Full Answer Page: What is a Series A Round?

An Investor Relations firm (IR Firm) is typically a 3rd party company that helps Issuers communicate with their pool of existing investors. Their primary objective is to accurately communicate company news and operational progress to the shareholders. IR firms must be acutely aware of the regulatory landscape to ensure they are not communicating anything that would violate any SEC regulations.

In equity crowdinvesting, investor relations is a critical part of the process as repeat investments from your existing pool of investors can be significant if you are properly marketing your crowdinvesting raise. It can be particularly helpful to engage an IR firm that also has licensed brokers on staff.

For more information, click here to read our blog post: Why Sales & Investor Relations is Important for All Crowdinvesting Capital Raises

The CROWDFUND Act refers to Title III of the JOBS Act which was the core piece of this particular law that created a path for small businesses to use crowdfunding as a way to advertise, sell and issue securities in their business; something that was not previously permitted in the United States.

A retail investor typically refers to a nonprofessional individual investor who buys and/or sells securities through a brokerage firm.

The New York Stock Exchange (NYSE) is a stock exchange located in New York City. It is the largest and oldest stock exchange in the United States, and it is considered to be one of the most prestigious and important stock exchanges in the world. The NYSE lists some of the largest and most well-known companies in the world, including Apple, Coca-Cola, and Microsoft.

The NYSE operates as an auction market, which means that buyers and sellers come together on the trading floor (or remotely) to negotiate prices for securities. A Designated Market Maker (DMM) manages the trading of each security and is responsible for maintaining an orderly market and fair pricing by buying or selling when necessary.

The NYSE is a member-based organization, with companies that want to list on the exchange required to meet certain financial and other requirements. Once listed, companies must comply with ongoing reporting and governance requirements and adhere to strict rules and regulations to maintain their listing.

The NYSE is part of the Intercontinental Exchange (ICE) since 2013 and It operates under the name NYSE Group, Inc. It also operates other markets such as NYSE American and NYSE Arca, which are segments of the NYSE with different listing and financial requirements and serving different types of companies.

Listing on the NYSE can provide a company with increased visibility and credibility among investors, and it also tends to make it easier to raise capital through follow-on offerings. As well, it also generates higher trading volume and liquidity of the company’s shares.

View Full Answer Page: What is the NYSE (New York Stock Exchange)?

An institutional investor is an entity that pools capital to purchase securities or other types of investment assets on behalf of its shareholders or members. Some examples of institutional investors include:

• Certain types of banks
• Credit unions
• Hedge funds
• Mutual Funds
• Investment advisors
• REITs
• Endowments
• Pension Funds
• and more

A capital raise, also known as a funding round, is when a company raises money from investors. The process of raising capital typically involves a company issuing shares of stock or other securities to investors in exchange for money or other assets. Companies may go through multiple funding rounds throughout their life, with each round allowing them to raise larger amounts of capital as they grow and prove their business model.

There are several different types of funding rounds:

• Seed round: The first round of funding for a company, usually from friends, family, and angel investors. The money raised in this round is typically used to develop a proof-of-concept and create a working prototype of the product.
• Series A round: This is the first round of venture capital financing, typically led by professional venture capital firms. The funds are used for product development and early-stage operations.
• Series B round: This round is typically led by growth-stage venture capital firms, and the funds are used for expansion, hiring, and growth.
• Series C round and beyond: These rounds are for more established companies with proven business models, and the funds are used for further expansion and growth, as well as acquisitions.
• Initial Public Offering (IPO): This is the process of a company selling shares of stock to the public for the first time, allowing them to raise large amounts of capital while also becoming publicly traded.

It’s worth noting that the naming of the rounds, and the stages of the company might slightly vary depending on the context but the basic idea is the same.

View Full Answer Page: Funding Rounds Explained

Private equity refers to the investment of capital in privately held companies, as opposed to publicly traded companies. Private equity investors typically invest in companies that are not publicly traded, with the goal of generating a high rate of return on their investment.

There are a few different ways that private equity firms may invest in companies, including:

• Buyout: A buyout is the acquisition of a controlling interest in a privately held company, often with the goal of taking the company private. The investors may acquire all of the outstanding shares of the company or a majority stake.
• Venture capital: This type of private equity investment is typically made in young, high-growth companies in the technology, healthcare, or other innovative sectors. Venture capital firms provide capital and expertise to help these companies scale and become successful.
• Growth capital: Growth capital is a type of private equity investment that provides capital to companies that have already established themselves and are looking to expand. The investment is often used to finance new products, enter new markets, or make acquisitions.

Private equity firms generally have a longer-term investment horizon than other types of investors, and they often hold the assets they purchase for several years before exiting the investment. This is often done through an initial public offering (IPO), in which the company becomes publicly traded, or by selling the company to another buyer.

It can also have significant impact on the companies they invest, in both positive and negative way. Private equity firms may focus on cost cutting and streamlining operations to improve profitability, which can result in job losses or closures. On the other hand, they may help support the company’s expansion or bring in industry expertise that can help improve the company’s operations and increase its value.

View Full Answer Page: What is Private Equity?

The U.S. Securities and Exchange Commission, commonly referred to as the SEC, is an independent agency of the United States federal government whose authority was established by the Securities Act of 1933 and Securities Exchange Act of 1934; both parts of Franklin D. Roosevelt’s New Deal initiative.

The primary purpose of the SEC is to enforce laws that prevent market manipulation and protect investors.

A private placement is a method of raising capital by issuing and selling securities directly to a small number of select investors, rather than to the general public. These investors are typically institutions, such as insurance companies, pension funds, and wealthy individuals, known as “accredited investors,” as they are considered financially sophisticated and have the resources to bear the risks of the investment.

Private placements are not registered with the Securities and Exchange Commission (SEC) and are not subject to the same disclosure and registration requirements as securities sold in a public offering. This means that the company issuing the securities does not have to provide the same level of information about its financials and operations as it would in a public offering, which can make the process quicker and less expensive.

The process of a private placement usually starts with a company issuing a private placement memorandum (PPM), which is a document that provides detailed information about the company, the securities being offered, and the terms of the investment. The investors review the PPM and conduct their own due diligence before deciding whether to invest. Once the investors have decided to invest, the company and the investors will execute a subscription agreement, which sets forth the terms of the investment, including the purchase price, the number of shares being purchased, and the rights of the investors.

Private placements can be an attractive option for companies that are not yet ready or able to go public, but need to raise capital quickly. However, it’s also worth noting that private placement securities are often subject to restrictions on resale, and may not be as liquid as publicly traded securities.

View Full Answer Page: What is a Private Placement?

The NASDAQ, short for National Association of Securities Dealers Automated Quotations, is a stock exchange based in New York City. It was founded in 1971 and is the second-largest stock exchange in the United States by market capitalization, behind the New York Stock Exchange (NYSE). It is known for its electronic trading platform and for listing technology companies such as Amazon, Facebook, and Tesla.

One of the main difference between NASDAQ and NYSE is that the NASDAQ operates as a dealer market while the NYSE is an auction market, what means that in the NASDAQ market, buyers and sellers negotiate trades directly with market makers, instead of via an auction, like in the NYSE.

The NASDAQ is home to many of the world’s leading technology and growth companies, including Apple, Microsoft, Intel, and Cisco Systems. It also provides trading in a wide range of other securities, including exchange-traded funds (ETFs), options, and bonds. Additionally, NASDAQ operates the NASDAQ Nordic and NASDAQ Baltic exchanges, providing trading in securities across Europe.

NASDAQ also operates other markets such as the Nasdaq Global Select Market, Nasdaq Global Market, and the Nasdaq Capital Market, which are segments of the NASDAQ Stock Market, with different listing and financial requirements, serving different types of companies.

View Full Answer Page: What is the NASDAQ?

Here is a list of some of the main stock exchanges in the United States:

• New York Stock Exchange (NYSE): The largest and oldest stock exchange in the United States, located in New York City. The NYSE lists some of the largest and most well-known companies in the world, including Apple, Coca-Cola, and Microsoft.
• NASDAQ: The second-largest stock exchange in the United States by market capitalization. The NASDAQ is known for its electronic trading platform and for listing technology companies such as Amazon, Facebook, and Tesla.
• Chicago Board of Trade (CBOT): A commodity and financial futures and options exchange in Chicago. It’s part of the CME Group, it provides trading in agricultural and financial products.
• Chicago Mercantile Exchange (CME): A global derivatives marketplace in Chicago that provides trading in futures contracts and options on futures contracts in various asset classes, including agricultural products, energy, and financials.
• American Stock Exchange (AMEX): A former stock exchange in the US, it merged with the NYSE in 2008 and the name is used for certain NYSE listing option.
• BATS Global Markets: A global stock exchange, it operates four exchanges, including the BZX Exchange and BYX Exchange in the U.S. It is currently the third-largest stock exchange operator in the U.S.
• Intercontinental Exchange (ICE): A global network of exchanges, including the New York Stock Exchange, the ice futures exchange and several other marketplaces for futures and options trading
• OTC Markets: (Over-the-counter) It is a platform for trading securities that do not meet the listing requirements of traditional stock exchanges. It includes the OTCQX, OTCQB, and Pink markets.

This list is not exhaustive and there are other local and regional exchanges across the US, but these are the most widely known and active ones.

View Full Answer Page: What are the Primary Stock Exchanges in the US?

A joint venture is an entity that is created when two or more businesses pool funds to accomplish a specific business objective. With a joint venture, you typically have:

• Shared ownership in the entity
• Shared corporate governance
• Shared profits and returns
• Shared risks

An Alternative Trading System (ATS) is a trading venue that matches buyers and sellers of securities that are not listed on a public exchange. From a regulatory standpoint, Alternative Trading Systems are most often regulated as broker-dealers as opposed to being regulated as exchanges. An ATS must be reviewed and approved by the SEC prior to conducting business to operate as an exchange alternative.

For a list of current Alternative Trading Systems, you can visit the SEC’s website here to download the list ((which is updated by the SEC monthly: Alternative Trading System (“ATS”) List))

Pink sheets refer to stock listings that are traded over-the-counter (OTC) as opposed to on a major stock exchange such as the NYSE or NASDAQ. Oftentimes, companies that trade over-the-counter are able to meet the stricter set of requirements that would need to be fulfilled by a company to list on a major US stock exchange.

A broker-dealer (B-D) is a company that has been approved to trade securities; either for its own business directly OR on behalf of its clients. Broker-dealers must be registered with FINRA, which is overseen by the SEC.

Brokers-dealers are commonly used in Regulation A, Regulation CF and Regulation D 506(c) investment offerings.

At its broadest definition, crowdfunding refers to the method of raising funds for a specific project or organization by raising smaller amounts of money from a very large number of people. Crowdfunding campaigns are typically done via the internet using various digital marketing tactics.

Want to know more about the four primary types of crowdfunding? View our article here: What are the types of crowdfunding?