FASB

(USA) The Financial Accounting Standards Board. The quasi-public body primarily responsible for developing rules governing USA generally accepted accounting practices.

Federal Deposit Insurance Corporation (FDIC)

(USA) A US federal agency that insures deposits in member banks and thrift institutions up to $100,000.

Final Prospectus

The final version of a prospectus that includes the final price, delivery date and the underwriting spread. It is given to all investors who wish to purchase the issue.

Financial Services Authority (FSA)

The Financial Services Authority is an independent non-governmental body in the UK which exercises statutory powers under the Financial Services and Markets Act 2000 (and certain other legislation). The FSA is the competent authority regulating the securities industry in the UK, including banks, brokers, investment houses, and financial advisers. It was created by the merger of functions previously performed by the Securities Investment Board, or SIB, Investment Management Regulatory Organization, or IMRO, the Bank of England, and other agencies. See ‘Competent Authority.’

Firm Commitment Underwriting

An underwriting arrangement in which an underwriter agrees to purchase all of the securities being offered for resale to the public, thereby, in theory, assuming the risk of finding buyers. In practice, this risk is very slight by the time an underwriter becomes legally obligated to purchase the securities from the issuer, as the underwriters will already have ‘built a book’ of investors who have indicated an interest in buying the securities. Compare with ‘All-or-None’ and ‘Best Efforts Underwriting.’

First Preferred Stock or Shares

Preferred stock that takes precedence over other preferred and common stock with regard to dividends and assets. Also called ‘Senior Preferred Stock or Shares.’

First Refusal

See ‘Right of First Refusal.’

First Stage/Round

The first round of financing that involves an institutional venture capital fund.

Five-year Rolling IRR

The Five-year Rolling IRR shows the development of the Five-year Horizon IRR, measured at the end of each year.

Flat Pricing

(UK) In a flat priced deal, the entrepreneur/management team and the venture capitalist pay the same price for their ordinary shares. The balance of the funds contributed by private equity investors is used to purchase other forms of “institutional” equity (e.g. convertible loan stocks, preference shares). See ‘Envy Ratio.’

Float or Free Float or Public Float

The number of shares not held by corporate insiders that are freely tradable in the public market or markets on which a company’s securities are listed.

Flotation

The process by which a company obtains a listing from the UKLA and is admitted to trade on the London Stock Exchange.

Flowback

(USA) Term used to describe securities initially offered outside the USA that are subsequently resold to USA residents, which may be in violation of applicable restrictions or registration requirements. This term is also used in Europe in the same context. See ‘Anti-Flowback Rules.’

Follow-on Investment

An additional investment by existing investors, which may be provided for in documentation relating to the initial investment.

Forms

See ‘Registration Statement’ and ‘Reporting Company Forms.’

Forward Pricing

(USA) The SEC requirement that open-end investment companies (popularly called ‘mutual funds’) set their share price based on net asset value and base all incoming buy and sell orders on the immediately subsequent net asset value.

Founder’s Stock

Stock issued to the founders of a company, usually at a low price in comparison to that paid by investors.

Free Cash Flow

The after-tax operating earnings of a company, plus non-cash charges (e.g. depreciation), less investment in working capital, property, plant and equipment, and other assets.

Free Float

See ‘Float.’

Freeze-Out

A process whereby a controlling stockholder of a company prevents dividends or other benefits from flowing to minority stockholders, usually as a prelude to buying out their stock at a low price.

FTSE 100

An index based on the stock of the top 100 companies (by market capitalization) traded on the London Stock Exchange (Official List). See ‘Index’ and ‘Official List.’

Full List

See ‘Official List.’

Fully Diluted Earnings Per Share

Common stock earnings per share calculated as if all warrants and stock options were exercised and all convertible bonds and preferred stock (and certain convertible debt) were converted. Fully diluted earnings per share are usually a more accurate reflection of the company’s real earning power.

Fully Diluted Outstanding Shares

The number of shares representing total company ownership, including common shares and current conversion or exercised value of the preferred shares, options, warrants, and other convertible securities.

Fund

A vehicle for enabling pooled investment by a number of investors in securities of companies (investee/portfolio companies). These are generally private companies whose shares are not quoted on any stock exchange. The fund can take the form of either a company or an unincorporated arrangement such as a limited partnership. See ‘Limited Partnership.’

Fund Age

The age of a fund (in years) from its first drawdown to the time an IRR is calculated.

Fund Capitalization/Fund Size

The total amount of capital committed by the limited and general partners of a fund.

Fund Focus (Investment Stage)

The strategy of specialization by stage of investment, business sector of investment, or geographical concentration. This is the opposite of a generalist fund, which does not focus on any specific geographical area, sector or stage of business.

Fund of Funds

An investment fund that invests in other investment funds.

Fundraising

The process by which venture capitalists themselves raise money to create a fund. These funds are raised from private, corporate or institutional investors, who make commitments to the fund which will be invested by the general partner. See ‘General Partner.’ ‘Limited Partner.’ ‘Commitment.’