Crowd-Sourced Funding (CSF) Glossary

Crowd-Sourced Funding (CSF) Glossary

Whether you’re new to investing or a seasoned financial professional, the world of equity crowdfunding comes with a wide range of unique terms that you may not have come across before. 

Admittedly, a lot of the jargon used in the finance industry can be at times unnecessary and restrictive to newcomers. Here at Equitise, we’re trying to democratise the venture capital industry and provide unique opportunities to everyday investors. So while we will still use the technical terms where relevant, education is a top priority of ours, and here’s a quick breakdown of some of the key terms.

Accredited Investor

An investor that meets certain regulatory criteria and is able to participate in a wider range of investment opportunities. For more information please click here.

Angel Investor

An investor who provides capital for a business or a start-up in exchange for convertible note or ownership equity, generally at a very early stage in the pursuit of a higher eventual return.

Balance Sheet   

A statement of the assets, liabilities, and capital of a business or other organisation at a particular point in time.

Break-Even Point 

The point at which gains from revenues equal losses from expenses, after which a firm becomes profitable.

Bridge Financing

A method of financing used by companies before their IPO, to obtain necessary cash for the maintenance of operations.

Business Traction

The progress of a start-up company and the momentum it gains as the business grows. Measures of traction are often more specific to that company but include revenue, user levels and sales. 


The funding period for a specific project in a crowdfunding platform.

Cash Flow Statement

A document that represents the cash inflows and outflows from business operations.

Class A Shares   

A specific share class that can be accompanied by more or less voting rights than Class B shares. Typically Class A shares have more voting rights.

Class B Shares

A specific share class that can be accompanied by more or less voting rights than class A shares. Typically Class B shares have less voting rights (Note a company can have further classes of shares with differing levels of rights).

Cooling-Off Period

The cooling-off period is a 5 business day period during which an equity crowdfunding investor may elect to withdraw their investment at no cost. 


A company’s constitution is its central organisational document that defines all internal matters, leadership hierarchies and voting processes. 

Crowdfunding Platform

An online portal or intermediary that allows projects to be represented on the web portal to attract backers, investors and donors.

Deal Room

The deal room on the Equitise platform contains all relevant information in a summarised form for a particular equity crowdfunding campaign. It includes the full offer document, in addition to business information, financial statements, team information and a Q&A functionality for investors.


A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).


A reduction in the relative proportion of a shareholding due to the issue of additional shares in a company without an increase in your own holding.

Equity Crowdfunding

The offering of securities of a business in a crowdfunding platform to a group of people for investment. Eligible companies can sell shares directly to eligible investors through an equity crowdfunding intermediary such as Equitise. 

Exit Strategy

The method by which a venture capitalist or business owner intends to get out of an investment that they have made in the past. Usually, it comes in the form of an IPO, acquisition by a larger company, or profit distribution.

Financial forecast

An estimate of future financial outcomes for a company.

Fully-Diluted Shares

The total number of shares that would be outstanding if all possible sources of conversion, such as convertible bonds and stock options, were exercised.

Growth Stage    

A stage in the life cycle of a company characterised by rapid revenue and profit increase.

Illiquid Asset

The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. 

Initial Public Offering (IPO)

The first sale of stock by a company to the public. Companies can “float” on a public stock exchange such as the ASX, enabling investors to purchase and subsequently trade their shares.

Intellectual Property

Intangible assets that are the result of creativity, and are legally protected by means such as patents, copyrights, etc. 

Investment Memorandum (IM)

Document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, detailed description of the business, etc.


A legal entity that develops, registers and sells securities for the purpose of financing its operations. Generally, this is the company selling the shares.


Liquidity is a measure of how easily an asset can be converted into cash or cash equivalents. Highly liquid assets include publicly traded shares, while fine art or a house would be considered illiquid assets, and are more difficult and costlier to convert into cash.

Liquidity Event  

The merger, purchase or sale of a corporation or an initial public offering. A liquidity event is a typical exit strategy of a company, since the liquidity event typically converts the ownership equity held by a company's founders and investors into cash.

Market Opportunity

A forecasted demand in specific markets for a particular product or service in which unsatisfied customer needs exist.

Offer Document

The offer document is a key document in the equity crowdfunding process prescribed by regulatory legislation. Similar to an investment memorandum, the offer document contains all relevant information required to make an informed investment decision. 


A financial derivative security whereby the security provides the buyer the right but not the obligation to buy/sell a security at a predetermined price during a specified period of time.

Ordinary Share  

A share entitling its holder to dividends of profits which vary in amount, and may even be missed, depending on the performance of the company.


Overfunding is a term used to describe an equity crowdfunding deal that has raised over its minimum raise amount. Beyond this, investors can still purchase shares in the company up to its maximum amount, after which the deal automatically closes. 

Pitch Deck

A visually appealing presentation of a summarised business plan.

Preference Shares

A share which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends, often at the expense of voting rights.


The purchase of shares by one person or party before the opportunity is offered to others.

Pre-Money Valuation

The company’s value prior to an investment.

Private Placement

The sale of securities to a relatively small number of select investors as a way of raising capital.

Post-Money Valuation

The company’s value after an investment round.

Profit and Loss Statement

A financial statement that summarises the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year.

Revenue Model

Key component of the business model. It primarily identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold.

Secondary Market

A market where investors purchase or sell securities or assets from other investors, rather than from issuing companies themselves.


A financial instrument that represents: an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Seed Capital       

The initial capital used to operate a business soon after its creation. 

Series A Financing

The first round of funding after an initial seed capital round.

Shareholders' Agreement

A contract/agreement among shareholders of a company that describes rights and obligations.


A newly established business.

Start-Up Capital

The money that is required to start a new business, whether for office space, permits, licenses, inventory, product development and manufacturing, marketing or any other expense.

Term Sheet

A non-binding agreement that sets forth the basic terms and conditions under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents.


The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.

We hope some of these may help you to better understand the world of equity crowdfunding. If you have any further questions, please do not hesitate to get in touch!

First in the know
Get first dibs on new offers