Reference

Capital Raising Glossary

Plain-English definitions of the terms that matter in fundraising, LP outreach, and fund formation.

A

Accredited Investor An individual or entity that meets specific SEC-defined income, net worth, or professional criteria, qualifying them to invest in private fund offerings. Alternatives Allocation The portion of an investment portfolio dedicated to non-traditional asset classes such as private equity, venture capital, real estate, hedge funds, and infrastructure. American Waterfall An American waterfall is a distribution structure where the GP earns carried interest on each profitable deal individually, rather than waiting for total fund profitability. AML/KYC AML/KYC refers to anti-money laundering and know-your-customer procedures that verify investor identity and screen for illicit finance risks. Anchor Investor The first institutional or significant LP to commit capital to a fund, whose participation serves as a credibility signal that accelerates the rest of the fundraise. Angel Investor A high-net-worth individual who invests personal capital into early-stage companies, typically at the pre-seed or seed stage, in exchange for equity. Anti-Dilution Protection A provision in preferred stock that adjusts an investor's conversion price downward if the company later raises capital at a lower valuation. Asset Allocation The process of dividing an investment portfolio across different asset classes to balance risk, return, and liquidity objectives.

B

Benchmark A benchmark is a standard of comparison used to evaluate a fund's performance against peer funds, public markets, or target return thresholds. Blind Pool A fund structure where LPs commit capital before the GP has identified the specific investments the fund will make. Blue Sky Laws Blue sky laws are state-level securities regulations that require issuers to file notices and pay fees when offering securities to residents of that state. Board Seat A board seat grants an investor or their designee a position on a company's board of directors with voting authority on governance matters. Bolt-On Acquisition A smaller acquisition integrated into an existing portfolio company to add revenue, capabilities, or geographic coverage. Bridge Financing Bridge financing is short-term capital provided to sustain a company between major funding rounds or liquidity events. Brownfield Investment A brownfield investment is the acquisition of an existing asset or facility that requires renovation, expansion, or operational improvement rather than new construction. Burn Rate The rate at which a company spends its cash reserves, typically measured monthly, before reaching profitability or securing additional funding.

C

Cap Table A ledger that records every shareholder's ownership stake in a company, including shares, options, warrants, and convertible instruments. Capital Account A capital account is a running ledger that tracks each LP's economic interest in a fund, reflecting contributions, distributions, gains, losses, and fees. Capital Call A formal notice from the GP to LPs requesting that they transfer a portion of their committed capital to the fund for investments or expenses. Capital Commitment The total amount of capital an LP pledges to contribute to a fund, drawn down over time through capital calls. Capital Introduction A service, typically offered by prime brokers, that connects fund managers with prospective institutional investors through organized events and introductions. Carried Interest The GP's share of fund profits, typically 20%, earned after returning LP capital and meeting a preferred return hurdle. Carried Interest Tax Treatment Carried interest tax treatment refers to the taxation of a GP's profit share at long-term capital gains rates rather than ordinary income rates. Cash-on-Cash Return Cash-on-cash return is the ratio of annual cash income received from an investment to the total cash invested, expressed as a percentage. Catch-Up Provision A catch-up provision is a clause in fund economics that allows the GP to receive a disproportionate share of profits after LPs receive their preferred return, until the GP reaches its agreed carried interest percentage. Clawback A provision in the LPA requiring the GP to return excess carried interest if later fund performance reveals the GP was overpaid relative to actual total returns. Climate Investing Climate investing is the allocation of capital to strategies that address climate change through mitigation, adaptation, or transition, spanning venture to infrastructure. Club Deal A private equity transaction where two or more PE firms jointly acquire a company, sharing the equity commitment, governance, and economics. Co-Investment A direct investment made by an LP alongside a fund into a specific portfolio company, typically offered at reduced or zero management fees and carried interest. Commitment Pacing A modeling framework that determines how much new capital an LP should commit to private funds each year to maintain target allocation levels. Continuation Fund A new fund vehicle created by a GP to acquire assets from an existing fund, extending the hold period and providing existing LPs with a liquidity option. Convertible Note A short-term debt instrument that converts into equity at a future priced funding round, typically with a discount rate and valuation cap. Core Infrastructure Core infrastructure refers to essential, operating physical assets with contracted or regulated revenues that generate stable, low-risk cash flows. Covenant A contractual provision in a loan agreement that requires the borrower to meet specific financial tests or restricts certain actions to protect the lender's position. Cross-Fund Investment An investment in which multiple funds managed by the same GP participate in the same deal, requiring a formal allocation policy to manage conflicts of interest.

D

Data Room A secure repository where a GP stores fund documents, financials, and diligence materials for prospective and existing LPs to review. Deal Flow The pipeline of potential investment opportunities that a PE firm receives, evaluates, and selects from to deploy committed capital. Debt-to-Equity Ratio The debt-to-equity ratio measures a company's financial leverage by dividing total debt by total shareholders' equity. Default Provision A clause in the LPA that defines the consequences for an LP who fails to fund a capital call, including penalties such as forfeiture of a portion of their fund interest. DEI in Investing DEI in investing refers to the incorporation of diversity, equity, and inclusion principles into fund management, capital allocation, and LP selection criteria. Denominator Effect A mechanical increase in an LP's private fund allocation percentage caused by a decline in their total portfolio value, not by any change in private holdings. Dilution The reduction in an existing shareholder's ownership percentage when new shares are issued, typically during a funding round or option pool expansion. Direct Lending Private debt financing provided directly by non-bank lenders to middle-market companies, bypassing traditional syndicated loan markets. Discount to NAV The difference between a fund interest's transaction price and its reported net asset value, expressed as a percentage, reflecting the buyer's required return and market conditions. Distressed Debt Debt securities of companies in financial difficulty, trading at significant discounts to par value, typically below 70 cents on the dollar. Distribution In-Kind A distribution in-kind is when a fund distributes portfolio securities or assets directly to LPs instead of selling them and distributing cash. Distribution Waterfall The structured sequence in which a fund's profits are distributed between the GP and LPs, defining the priority and order of payouts. Dividend Recapitalization A transaction where a portfolio company takes on new debt to fund a cash distribution to its equity holders, typically the PE sponsor and management. Dodd-Frank Act The Dodd-Frank Act is the 2010 federal law that overhauled financial regulation, expanding SEC oversight of private fund managers and creating new reporting requirements. Down Round A funding round in which a company raises capital at a lower valuation than its previous round, reducing the implied value of existing shares. DPI (Distributions to Paid-In) DPI is the ratio of cumulative cash distributions returned to limited partners divided by the total capital they have contributed to the fund. Drag-Along Rights A contractual provision that allows a majority of shareholders to force remaining minority shareholders to participate in a sale of the company on the same terms. Dry Powder Capital that has been committed to private funds by LPs but has not yet been called or deployed into investments. Due Diligence Due diligence is the systematic investigation and analysis an investor conducts before committing capital to a fund or investment opportunity. Due Diligence Questionnaire A standardized document, often 100+ questions, that LPs send to fund managers to evaluate the fund's strategy, operations, team, and risk profile before committing capital.

E

EBITDA Earnings before interest, taxes, depreciation, and amortization, the standard proxy for operating cash flow used to value and compare private companies. EBITDA Multiple An EBITDA multiple is a valuation ratio calculated by dividing enterprise value by EBITDA, used to compare companies and price transactions. Emerging Manager A fund manager raising their first, second, or third institutional fund, typically with limited track record and smaller AUM than established firms. Endowment A permanent pool of capital held by a nonprofit institution, invested to generate returns that fund the organization's mission in perpetuity. Enterprise Value The total value of a business including both equity and net debt, representing what a buyer would pay to acquire the entire operating enterprise. ERISA ERISA is the federal law governing employee benefit plans, imposing fiduciary standards and restrictions on how pension assets are invested. ESG ESG is a framework that evaluates investments against environmental, social, and governance criteria alongside traditional financial metrics. European Waterfall A European waterfall is a distribution structure where the GP earns carried interest only after the entire fund has returned all capital and the preferred return to LPs. Excuse Provision A clause in the LPA allowing specific LPs to be excused from participating in particular investments due to legal, regulatory, or policy conflicts. Exempt Reporting Adviser An exempt reporting adviser is a fund manager exempt from full SEC registration who must still file a limited Form ADV and submit to SEC examination. Exit Strategy The planned method by which a PE fund sells or otherwise monetizes a portfolio investment to generate returns for its limited partners. Extension Period An additional time window beyond the base fund term, typically one to two years, allowing the GP to manage and exit remaining investments before final liquidation.

F

Family Office A private organization that manages the wealth, investments, and financial affairs of one or more ultra-high-net-worth families. Feeder Fund A fund that collects capital from a specific investor group and channels it into a master fund, typically to accommodate different tax, regulatory, or reporting needs. Fiduciary Duty Fiduciary duty is the legal obligation to act in the best interest of another party, requiring loyalty, care, and full disclosure of conflicts. Final Close The last date on which a fund can accept new LP commitments, after which the fund's total capital base is fixed. First Close The initial closing of a fund where enough capital has been committed for the GP to begin calling capital and making investments. Follow-On Investment An additional investment made by an existing investor in a portfolio company during a subsequent financing round, typically to maintain ownership percentage or support the company's growth. For-Cause Removal A provision allowing LPs to remove the GP upon demonstrating specific misconduct, such as fraud, gross negligence, willful misconduct, or material breach of the limited partnership agreement. Form D An SEC filing that fund managers must submit after their first sale of securities, serving as the formal notice that the fund is relying on a Regulation D exemption. Full Ratchet Anti-Dilution Full ratchet anti-dilution adjusts an investor's conversion price to match any lower price in a future financing round. Fund Administration The outsourced operational and accounting services that manage a fund's financial reporting, investor communications, capital calls, and regulatory compliance. Fund Custodian A financial institution that holds and safeguards a fund's assets, settles transactions, and provides independent verification of holdings. Fund Domicile The legal jurisdiction in which a fund is organized and registered, determining its tax treatment, regulatory framework, and structural options. Fund Formation The legal, structural, and regulatory process of establishing a private investment fund, from entity setup through documentation and regulatory filings. Fund Lifecycle The complete sequence of stages a private fund passes through, from formation and fundraising through investment, harvesting, and final liquidation. Fund of Funds An investment fund that allocates capital across multiple underlying private equity, venture capital, or hedge funds rather than investing directly into companies. Fund Size Fund size is the total capital committed by all investors to a private fund, determining the scale of investments the GP can pursue. Fund Term The contractual lifespan of a private fund, typically 10 years, after which the fund must liquidate its remaining holdings and distribute proceeds to investors. Fundraising Mandate A formal agreement authorizing a placement agent or advisor to raise capital on behalf of a fund manager, defining scope, exclusivity, and compensation. Fundraising Roadshow A structured series of meetings where a GP presents their fund thesis, track record, and terms to prospective limited partners.

G

Gatekeeper An investment consultant or advisor who screens, evaluates, and recommends fund managers to institutional LPs, influencing allocation decisions. General Partner The entity or individual responsible for managing a fund's investments, operations, and LP relationships, bearing unlimited liability for fund obligations. GP Commitment The amount of capital the general partner invests into their own fund, demonstrating alignment of interest with LPs. GP-Led Secondary A secondary transaction initiated by the general partner, typically involving the transfer of portfolio assets into a new vehicle with fresh capital and extended hold periods. Greenfield Investment A greenfield investment is the development of a new asset or facility from the ground up on previously undeveloped or unused land. Gross IRR Gross IRR is the internal rate of return on a fund's investments calculated before deducting management fees, carried interest, and expenses. Growth Equity Minority or light-majority investments in profitable, scaling companies that need capital to accelerate growth without giving up full control.

H

Hard Cap The maximum amount of capital a fund can accept, set in the LPA, beyond which no additional commitments will be admitted. Harvest Period The phase of a fund's lifecycle after the investment period ends, during which the GP focuses on managing, growing, and exiting existing portfolio companies. Hedge Fund A hedge fund is a pooled investment vehicle that uses diverse strategies across public and private markets to generate absolute returns regardless of market direction. High Net Worth Individual An individual with investable assets exceeding $1 million, excluding primary residence, who qualifies for private investment opportunities. Hurdle Rate The minimum annual return threshold, typically 8%, that a fund must deliver to LPs before the GP earns carried interest.

I

Impact Investing Impact investing is the deployment of capital into companies or funds with the explicit intent to generate measurable social or environmental outcomes alongside financial returns. Information Rights Information rights entitle investors to receive regular financial statements, budgets, and operating data from a portfolio company. Infrastructure Fund An infrastructure fund is a private markets vehicle that invests in physical assets essential to economic activity, including transportation, energy, utilities, and digital infrastructure. Institutional Investor An organization that pools large sums of capital and invests on behalf of its members, beneficiaries, or stakeholders. Internal Rate of Return Internal rate of return is the annualized discount rate that sets the net present value of all cash flows from an investment to zero. Investment Advisers Act of 1940 The Investment Advisers Act of 1940 is the federal statute requiring investment advisers to register with the SEC and adhere to fiduciary standards. Investment Company Act of 1940 The Investment Company Act of 1940 is the federal law regulating pooled investment vehicles, from which most private funds seek exemption. Investment Period The defined window, typically three to five years from first close, during which a fund's GP is authorized to make new investments using committed capital. Investor Relations The function within a fund manager responsible for LP communication, reporting, fundraising support, and ongoing relationship management. IPO / Initial Public Offering An IPO is the process of offering a private company's shares to the public for the first time on a stock exchange.

J

J-Curve The pattern in private fund returns where performance is negative in the early years due to fees, expenses, and unrealized investments, before turning positive as portfolio companies mature and are exited.

K

Key Person Clause A provision in the limited partnership agreement that suspends or restricts the fund's investment activities if designated key individuals leave or can no longer dedicate sufficient time to the fund.

L

Leveraged Buyout An acquisition of a company funded primarily with debt, where the target's cash flows service the borrowing used to purchase it. Limited Liability Limited liability is the legal principle that restricts an investor's potential loss to the amount of capital they have committed or contributed to a fund. Limited Partner An investor who commits capital to a fund but has no role in managing it, with liability capped at the amount they invested. Limited Partnership Agreement The governing contract between a fund's general partner and limited partners that defines economics, rights, obligations, and operational terms. Liquidation Preference A preferred shareholder's contractual right to receive a specified return on their investment before common shareholders receive any proceeds in a liquidation event. Loss Ratio Loss ratio is the percentage of a fund's total invested capital that is lost to write-downs or write-offs across the portfolio. LP Advisory Committee A committee of select limited partners that advises the GP on conflicts of interest, valuations, and other matters specified in the LPA. LP Secondary A secondary transaction initiated by a limited partner who sells their existing fund interest to another investor, typically at a discount or premium to NAV.

M

Management Buyout An acquisition where the company's existing management team purchases the business, typically with financial backing from a PE sponsor. Management Company A management company is the legal entity that employs the fund manager's team and receives management fees for operating the fund. Management Fee An annual fee, typically 1.5-2% of committed capital, paid by LPs to the GP to cover the fund's operating costs. Master Fund The central investment vehicle in a master-feeder structure that holds all portfolio assets and executes the investment strategy. Mezzanine Debt Subordinated debt that sits between senior secured loans and equity in a company's capital structure, often including equity participation through warrants or conversion features. Minimum Commitment The smallest capital commitment a fund will accept from a single LP, set by the GP to manage fund operations and investor base composition. MOIC (Multiple on Invested Capital) The ratio of total value returned (or expected) to total capital invested, expressed as a multiple such as 2.0x or 3.0x. Money Multiple Money multiple is the ratio of total value returned from an investment to the total capital invested, measuring absolute return as a simple multiple. Most Favored Nation Clause A provision granting an LP the right to elect any more favorable terms that the GP has offered to other LPs of similar or smaller commitment size.

N

Net Asset Value (NAV) Net asset value is the total fair market value of a fund's assets minus its liabilities, representing the fund's current estimated worth. Net IRR Net IRR is the internal rate of return earned by limited partners after deducting management fees, carried interest, and fund expenses. No-Fault Divorce A provision allowing LPs to remove the GP or terminate the fund without demonstrating cause, typically requiring a supermajority vote of 75% or more of limited partner interests. Non-Participating Preferred Non-participating preferred stock gives holders a choice between their liquidation preference or converting to common stock at exit.

O

Offshore Fund A fund organized in a jurisdiction outside the manager's home country, typically in a tax-neutral location, to efficiently accommodate non-domestic and tax-exempt investors. Operational Value Creation Operational value creation is the process of improving a portfolio company's performance through management, efficiency, and revenue initiatives. Opportunistic Strategy Opportunistic investing is the highest risk-return tier in real assets, targeting distressed, development-stage, or complex situations with net IRR targets above 15%. Organizational Expenses Organizational expenses are the one-time costs incurred to establish a fund, including legal fees, regulatory filings, and formation documentation. Over-Commitment Strategy An LP strategy of committing more capital to private funds than the target allocation, anticipating that only a fraction is called at any given time.

P

Parallel Fund A separate fund vehicle that invests alongside the main fund on a pro-rata basis, structured to accommodate investors with different tax, regulatory, or legal requirements. Participating Preferred Stock Participating preferred stock entitles holders to their liquidation preference plus a pro-rata share of remaining proceeds. Pay-to-Play Pay-to-play requires existing investors to participate in future financing rounds or lose preferred stock rights. Pension Fund A pooled investment vehicle that manages retirement assets on behalf of employees, retirees, or public-sector workers. PIK Interest Interest that is not paid in cash but instead accrues and is added to the outstanding principal balance of the loan, compounding over time. Placement Agent A third-party intermediary hired by fund managers to help raise capital from institutional and high-net-worth investors, typically compensated as a percentage of capital raised. Platform Company The initial acquisition in a buy-and-build strategy that serves as the operational foundation for subsequent bolt-on acquisitions. Portfolio Construction The deliberate process of selecting, sizing, and diversifying investments across managers, strategies, vintages, and geographies to meet return and risk objectives. Post-Money Valuation The value of a company immediately after a new investment, calculated as pre-money valuation plus the capital invested in the round. Pre-Money Valuation The agreed-upon value of a company immediately before a new investment, used to determine the price per share and investor ownership percentage. Preferred Return The priority return, typically 8% IRR, that LPs receive on their contributed capital before the GP earns any carried interest. Private Credit Private credit is non-bank lending where funds provide debt financing directly to companies, bypassing traditional bank and public bond markets. Private Equity Private equity is an asset class where funds pool capital from investors to acquire, improve, and exit private companies for profit. Private Placement Memorandum The primary legal disclosure document for a private fund offering, describing the strategy, terms, risks, and team to prospective investors. Pro Rata Rights An investor's contractual right to invest in future funding rounds to maintain their ownership percentage in the company. Proprietary Deal An investment opportunity sourced directly by the PE firm through its own relationships, without an intermediary-led competitive sale process. Public Market Equivalent Public market equivalent is a methodology that benchmarks private fund returns against a public index by replicating the fund's cash flow timing.

Q

Qualified Institutional Buyer A qualified institutional buyer (QIB) is an institution that owns and invests at least $100 million in securities, eligible to trade under Rule 144A. Qualified Purchaser A qualified purchaser is an individual or entity meeting specific investment thresholds under the Investment Company Act, enabling access to 3(c)(7) funds. Quartile Ranking Quartile ranking is a benchmarking method that ranks private funds into four performance tiers based on metrics like IRR or TVPI relative to peer funds.

R

Re-Up When an existing LP commits capital to a manager's subsequent fund, continuing the investment relationship into the next vintage. Re-Up Rate The percentage of existing LPs who commit to a manager's subsequent fund, measuring investor retention across fund cycles. Real Assets Real assets are physical or tangible assets, including real estate, infrastructure, natural resources, and commodities, that derive value from their material properties. Realized Gains Realized gains are the actual profits generated when a fund exits an investment, calculated as exit proceeds minus the original cost of the investment. Recapitalization A restructuring of a company's capital mix between debt and equity, often used to return capital to investors or reposition the balance sheet. Registered Investment Adviser A registered investment adviser is a firm registered with the SEC or a state regulator to provide investment advice for compensation, subject to fiduciary duties. Regulation D A set of SEC rules that allows private funds to raise capital without registering the offering, provided they meet specific exemption requirements. Regulation S Regulation S is the SEC safe harbor for offering and selling securities outside the United States without SEC registration. Responsible Investing Responsible investing is an approach that incorporates environmental, social, and governance factors into investment decisions and ownership practices. Right of First Refusal A right of first refusal gives an existing holder the option to match any third-party offer before a sale closes. Roll-Up Strategy A private equity strategy that consolidates a fragmented industry by acquiring multiple small companies and combining them into one larger entity. Rule 506(b) Rule 506(b) is a Regulation D safe harbor allowing private offerings to unlimited accredited investors and up to 35 sophisticated investors without general solicitation. Rule 506(c) Rule 506(c) is a Regulation D safe harbor permitting general solicitation in private offerings, provided all investors are verified accredited investors. Runway The number of months a company can continue operating at its current burn rate before exhausting its cash reserves. RVPI (Residual Value to Paid-In) RVPI is the ratio of a fund's remaining net asset value to the total capital contributed by limited partners, measuring unrealized value.

S

SAFE (Simple Agreement for Future Equity) A financing instrument created by Y Combinator that gives investors the right to receive equity at a future priced round, without debt mechanics like interest or maturity. Search Fund A search fund is a vehicle where an entrepreneur raises capital to find, acquire, and operate a single private company, typically a small to mid-sized business. Secondary Market The market where existing investors buy and sell pre-existing commitments and positions in private equity, venture capital, and other private funds. Seed Round A startup's first priced or structured funding round, typically raising $1M-$5M to validate product-market fit and reach early milestones. Senior Secured Debt Debt that holds the highest priority of repayment and is backed by a lien on the borrower's assets, giving lenders first claim in a default scenario. Separately Managed Account A dedicated investment portfolio managed by a GP on behalf of a single investor, with customized terms, strategy parameters, and direct asset ownership. Series A A startup's first major institutional venture capital round, typically raising $5M-$20M to scale a validated product and business model. Series B A growth-stage venture capital round, typically raising $15M-$50M, focused on scaling operations, expanding markets, and accelerating revenue. Side Letter A separate agreement between a GP and an individual LP that modifies or supplements the terms of the main limited partnership agreement for that specific investor. Soft Cap The initial fundraising target for a fund, above which the GP may continue accepting commitments up to the hard cap. Sovereign Wealth Fund A state-owned investment fund that manages national savings, commodity revenues, or fiscal surpluses on behalf of a country's government. SPAC A SPAC (Special Purpose Acquisition Company) is a publicly listed shell company that raises capital through an IPO to acquire a private company within a set timeframe. Special Purpose Vehicle A legal entity created for a single investment or narrow purpose, isolating assets and liabilities from the sponsor's broader fund or business. Special Situations An investment strategy that targets opportunities arising from corporate events, financial dislocations, or complex situations that create pricing inefficiencies. Stapled Commitment An arrangement where the purchase of a secondary fund interest is tied to a commitment to the GP's new primary fund, linking a legacy portfolio acquisition with fresh capital allocation. Strip Sale A secondary transaction where an LP sells interests across multiple funds simultaneously as a single portfolio, rather than selling individual fund positions separately. Subscription Agreement A legal contract in which an investor commits to purchase a limited partnership interest in a fund by subscribing a specified amount of capital. Subscription Line of Credit A short-term credit facility secured by LP capital commitments that allows a GP to fund investments before issuing capital calls. Syndication The process of multiple investors collaborating to fund a single deal, with one investor typically serving as lead and others participating as co-investors to share risk and fill the capital requirement.

T

Tag-Along Rights Tag-along rights allow minority shareholders to join a majority shareholder's sale on the same terms and price. Take-Private Transaction An acquisition of a publicly traded company by a PE firm or investor group, resulting in the company's shares being delisted from the stock exchange. Target Fund Size The amount of capital a GP plans to raise for a fund, determined by strategy capacity, team resources, and market opportunity. Tender Offer A structured offer by a buyer, often arranged by the GP, to purchase fund interests from existing LPs at a specified price within a defined period. Term Sheet A non-binding document outlining the key economic and governance terms of a proposed investment, serving as the basis for negotiating definitive legal agreements. Total Value to Paid-In (TVPI) Total value to paid-in is the ratio of a fund's cumulative distributions plus remaining net asset value to total capital contributed by limited partners. Track Record A track record is a GP's documented history of investment performance across prior funds, measured by returns, multiples, and consistency. Transaction Fees Transaction fees are charges levied by the GP for services related to acquiring, financing, or monitoring portfolio companies, typically offset against the management fee. TVPI (Total Value to Paid-In) A fund performance multiple that measures total value created (distributions plus remaining NAV) relative to the capital LPs have contributed.

U

Unicorn A privately held startup valued at $1 billion or more, a term coined by venture capitalist Aileen Lee in 2013 to highlight the rarity of such outcomes. Unitranche A single-tranche debt facility that blends senior and subordinated debt into one instrument with a single set of terms, one interest rate, and one lender group. Unrealized Gains Unrealized gains are the increase in fair market value of investments still held in a fund's portfolio that have not yet been sold or exited.

V

Value-Add Value-add is a real estate and infrastructure investment strategy that targets underperforming assets requiring active management, renovation, or repositioning to increase value. Venture Capital Venture capital is a form of private equity financing where funds invest in early-stage companies with high growth potential in exchange for equity. Venture Debt A form of debt financing provided to venture-backed companies, typically used alongside or between equity rounds to extend runway without additional dilution. Vintage Year The year in which a fund makes its first investment or draws its first capital, used as the primary benchmark for comparing fund performance across market cycles. Virtual Data Room A cloud-based platform for securely sharing confidential fund documents with prospective investors during due diligence. Volcker Rule The Volcker Rule prohibits banks from proprietary trading and limits their ownership interest in hedge funds and private equity funds. Voting Rights Voting rights give shareholders the authority to vote on corporate matters including director elections, mergers, and charter amendments.

W

Warehousing The practice of a GP making investments before or during the fundraise, typically using a credit facility or GP capital, with the intent of transferring those assets into the fund at or after closing. Weighted Average Anti-Dilution Weighted average anti-dilution adjusts an investor's conversion price based on the relative size and price of a down round.

Z

Zombie Fund A private equity fund that has passed its expected term and is no longer actively investing but continues to hold unrealized portfolio companies with limited prospects for near-term exit.