Venture Capital Vocabulary
Updated: Dec 4, 2021
If we told you that you were in a “CBDR situation with a merchant one thousand yards off the port bow,” anyone with a naval background should recognize danger. However, a U.S. Army Ranger might not think twice. Within the broader military community, each branch and specialty speaks its own language and understanding it is critical. The importance of language is as true in the U.S. Armed Forces as it is in any professional industry. The venture capital industry and the broader investment community are no different in their own vocabulary. Understanding this language is crucial to making informed investment decisions.
AIN’s partner RBL1 provided this as part of its educational content. AIN and RBL1 partner to provide six hours of online courses about venture capital at no cost to our members. Below is a sample of the types of terms you’ll encounter in venture capital.
Accelerator: A program designed to help startups that are already performing. Accelerators help to scale the startup’s operations, provide product feedback, and help build connections with investors. These programs are typically less than six months and are cohort-based. An accelerator program provides mentorship, support, and capital in exchange for equity stakes. Examples include Y Combinator, 500 ,and Techstars.
Incubator: A longer-term program designed to bring together entrepreneurs in a common workspace (pre-COVID, of course) in the early stages of development. Compared to accelerators, they are non-competitive and much less hands-on providing minimum mentorship. Incubators typically provide some capital and in exchange will take an equity stake in the startup.
Bootstrapping: Business strategy by which a startup self-finances, eliminating the need for seed or angel investment. Bootstrapping can be further enabled by leaning out operations and a product that generates revenue early in the company's life cycle, therefore, eliminating the need for outside capital.
Carried interest: The percent share of profits general partners of a fund receive as compensation regardless of whether they contribute any initial funds. It acts as a performance fee.
Capital Call: When a fund makes an investment and messages the LPs to put capital into the fund account to invest in the portfolio companies.
Clawback: A clawback or clawback provision is a special contractual clause typically included in employment contracts by financial firms, by which money already paid must be paid back under certain conditions.
Cliff: Employee stock vesting agreements generally have a cliff, usually one year, after which employee stock options begin to vest. If an employee is fired or quits before the cliff date, they get zero shares. Managers and VCs like cliff dates because it incentivizes employees to work hard and ensure they are kept around to realize their cliff date.
Vesting: The process of gaining legal ownership of something. In the context of equity compensation, being vested simply means that you have ownership of the stock or the ability to exercise a stock option (given other criteria like share price are met). Companies use vesting as a way to ensure alignment with employees and incentivize them to stay on board in order to realize the full share of equity. Vesting occurs over a period of time and at a certain schedule. A typical vesting schedule is 4 years with a one year cliff. This means, after one year, the employee gets 25% vesting. Every month after, they get 1/48th until the 48th month when they are fully vested.
Convertible: The right of the investor to convert shares of Preferred Stock into shares of Common Stock at the Conversion Rate stated in the corporate charter. Conversion is usually automatic upon the occurrence of a Qualified IPO.
Down Round: A capital raise at a valuation lower than the round in which you invested. Stated another way, when the company sells additional shares at a lower price than which you bought them at.
Elevator Pitch: A concise presentation given by an entrepreneur to a potential investor about an investment opportunity. The presentation should be concise enough to be shared during an elevator ride.
Exit Velocity: A term from baseball originally referring to the speed of the baseball as it comes off the bat, immediately after a batter makes contact. In ,it refers to the speed between investment and exit, immediately when the investment is made to the liquidity event that allows the investor to cash out. Example — capital invested for growth funds has a higher exit velocity than capital invested by accelerators in startups because the ventures are less mature and have a longer time to exit.
Inside Round: A round of financing entirely composed of existing investors.
Key Performance Indicators (KPIs): quantifiable measures that demonstrate how effectively a company is achieving its stated goals. Examples might include, MoM (month over month) revenue growth, customer churn, margins. KPIs should be chosen based on the company’s industry and stage of development.
T2D3 (Triple-Triple Double-Double-Double): a KPI used within the SaaS (software as a service) industry and a path to achieving a $1B valuation. It refers to two years of tripling annualized revenue growth followed by three years of doubling it. Companies that are able to achieve this metric go from ~$1-2M in revenue to over $100M in 5-6 years.
Rules of 40s: a common KPI used with the Saas industry where the sum of growth rate and profit margin (expressed in percentages) exceeds 40%. It is used as a tool to help inform business managers when balancing profitability and growth since expanding either one of these usually negatively impacts the other.
Net Promoter Score: a range from -100 to 100 that indicates how likely consumers are to promote a given product. Consumers take a survey for a product and rate it from 0-10. The percentage of respondents who score the product 0-6 are subtracted from the percentage who scored it 9 or 10. Those who score the product as a 7 or 8 are considered neutral.
Minimum Viable Product (MVP): An early-stage version of your product that allows for customers to interact with it and provide critical feedback. It allows for a startup to make early course corrections from actual customers prior to building the entire product and risking building something that people don’t actually want.
Pay to Play: In venture capital, investors can raise the ante with co-investors by means of a “pay-to-play” provision, requiring that all investors in a portfolio company continue their pro-rata financial commitment to the company, or else lose certain rights with respect to their original investment. The rights can often be anti-dilution rights. In some ,there is a provision of a portion of pro-rata (e.g. 50%) or investors convert to common equity.
Pre-SEED / SEED / Series A, B,C…F: These terms are an unnecessarily opaque way to refer to rounds of funding for a startup. “Pre-Seed” is the earliest and usually smallest round where individual investors (friends, family, angel investors, etc.) commit funds. Seed funding is usually the first round where investments are made from company outsiders in exchange for equity. Earlier stage startups (usually anything until Series B) generally carry more risk because the business model isn’t proven and the organizational structure is less developed. As the rounds progress, the dollar size of the round increases as does the need for the startup to prove market traction and growth potential.
Pari Passu: Legal term that refers to equal treatment for two or more parties in an agreement meaning “on the same terms as”.
Party Round: A trend beginning several years ago in early financing rounds where, instead of raising large amounts of money from a few large investors, companies are raising small amounts of money from many small investors.
Angel Investor: Typically solo investors, with personal funding, and focused on earlier stage startups. They typically bridge the time period between family and friends and when institutional investors get involved. Due to the inherent risk of loss of capital or significant dilution in subsequent fundraising, angel investors typically pursue investments with returns that they believe may have the potential to return multiples of the initial investment.
Product Market Fit: The degree to which a product or service satisfies the demand for a particular product or customer base.
Syndicate: the group of investors who participate in a venture investment round
First Mover Advantage: The advantage of entering a new market first and capturing a larger share of the customer base (market) than your competitors.
Lock-up Period: The period that an investor must wait before selling or trading shares following an exit event.
Exit: The sale or exchange of a company’s ownership. These events allow a venture investor to cash out on their investment.
Unicorn: A private, investor-backed company valued at ≥$1B. This club includes Airbnb, SpaceX, Robinhood, and SoFi among others.
Cockroach: A company that is hardy and financially efficient enough to survive anything. Be a unicorn, not a cockroach.
Initial Public Offering (IPO): Process by which a formerly private company first issues stock to the public. New disclosures must be made, as the company must now adhere to SEC reporting requirements.
Lead Investor: Typically the firm or individual contributing the largest amount of capital in a given round. They lead the majority of the negotiations, legal work, and other administrative aspects of the investment deal. When the lead investor is the first investor in the fund, they can also be referred to as an anchor investor.
Pro-Rata Rights: Rights given to an investor to participate in subsequent funding rounds in order to prevent dilution and maintain their percent ownership of the venture. This becomes a way for investors to continue to invest in companies that they want to put more into.
Super Pro-Rata: When an investor will ask for more than their pro-rata right.
Road Show: Presentations usually made in several cities to potential investors and other potentially interested parties. A company will often use a roadshow to create interest from investors before its IPO.
General Partner (GP): They raise and manage the fund used for venture investments; set and make investment decisions. They also provide strategic partnerships with founders providing them advice and mentorship in order to achieve a successful exit.
Limited Partner (LP): Entities like pension funds, endowments, or high net worth individuals who invest capital in the VC firm. They give the firm capital to then invest in startups to generate returns. LPs are not involved in day-to-day operations or investment decisions.
Evaluating the Investment Opportunity
Valuation Cap: Sets the maximum price that a convertible security will convert into equity. To translate it into an effective share price, multiply the Series A share price by the Series A valuation divided by the valuation cap. An example is included below:
You invest $25K in a convertible note with a $10M cap.
During the Series A round, the company raises money at a $20M pre-money valuation at a price of $2/share.
Converting at the valuation cap, YOUR price per share is $1/share
Therefore, your note converts to 25,000 shares of Series A preferred stock.
This means, your 25,000 shares at $2/share are worth $50K (equal to a 100% unrealized gain on your initial investment of $25K)
Note: convertible notes usually have both a valuation cap and a discount rate. The discount rate comes into effect only if the round is priced at a value less than the valuation cap.
Annual Run Rate: The Annual Run Rate (also run rate — one word) is the annualized revenue of a company if you were to extrapolate the current revenue over a year. It refers to the financial performance of a company based on using current financial information as a predictor of future performance. The run rate functions as an extrapolation of current financial performance and is based on the assumption that current conditions will continue. Run rates are useful for new business or business units within a company that has only had a short period of revenue generation opportunity. This figure allows managers, venture ,and investors to measure the annualized revenue.
Priced round: An equity raise where investors buy shares of the company at a set share price.
Conversion Rate or Ratio: Means the number of shares of Common Stock into which each share of Preferred Stock is convertible.
Due Diligence: The process performed by prospective investors to assess the viability of an investment and confirm that the information provided by the company is accurate.
Earnings Before Interest and Taxes (EBIT): A measurement of the operating profit of the company. A possible valuation methodology is based on a comparison of private and public companies’ value as a multiple of EBIT. Just don’t ask Charlie Munger about EBIT or EBITDA...
Anti-dilution Provisions: These protect preferred stock investors in the event of a “down round”. They protect an investor from their equity stake in a company becoming diluted and less valuable. This happens when more shares are issued at a lower price than in the round which the investor originally participated in Below is an example illustrating a situation where anti-dilution provisions would kick in.
Seed Round - Invested all of the $1M raised at a $9M pre-money valuation (10% ownership on a post-money basis)
Series A round - raising $1M at $4M pre-money valuation
This would dilute your original ownership such that you now only own ~8% vs. 10% of the company prior to this new investment at the earlier round
ALSO, the overall value of your original $1M investment is now only worth about $415K
There are two common types of anti-dilution protection
(1) Full Ratchet
(2) Weighted Average
Full Ratchet: Anti-dilution protection where the investor doesn’t lose any value at all. All of the dilution occurs to the common shareholders.
In the example given, your $1M stake is still worth $1M and you now actually own 20% of the company.
The number of shares that you originally owned has grown and the number of shares times the share price still equates to $1M
Broad-Based Weighted Average: Anti-dilution protection for the benefit of existing preferred shareholders when additional offerings are made by a company. At the time of the additional offering, the company will adjust the value of the preferred shares to a new weighted average price. To calculate this new weighted average price, the company uses a formula that takes into account price per share, the amount of money a company previously raised, the amount of money to be raised in the new stock, and the price per share under that deal.
Ultimately, this provision lessens the devaluation of the original investment in down round.
ARR (Annual Recurring Revenue): The amount of revenue that is generated on a recurring basis. A common metric in evaluating a SaaS (software as a service) business. It is useful to determine the sustainability and health of the company’s revenue stream by ignoring “one-time” revenue bumps which cannot be relied upon for long term success.
If a $1M contract for services is signed to cover a 4 year period, the ARR would be $250K.
Burn Rate: How fast a business is spending money in excess of its revenue. Typically expressed monthly or weekly. Usually applied to a company with no revenues, to give a metric of financial health and fundraising needs. A company with a low burn rate can theoretically operate longer without a new injection of capital.
Capitalization Table (Cap Table): An official document that shows the capital structure of a company. Used for analysis of the founders' and investors' percentage of ownership, equity dilution, and value of equity in each round of investment.
COGS (Cost of Goods Sold): The costs directly associated with producing the goods sold by a company. It includes material and labor costs used to produce the goods or services.
Common Stock: A type of equity security, contrasted with preferred shares. Common stock is usually issued to founders, management, and employees. In a liquidation event, common stockholders are last in line for payment.
Preferred Stock: Compared to common stock, preferred stock is similar in that it also entitles the owner to an equity share of a company. However, unlike common stock, preferred stock :
Has a higher claim to liquidation and distributions than common stock (i.e. preferred stockholders get paid first)
Limited voting rights
Pays a fixed dividend
Also can come with other protections like anti-dilution provisions
Deal Flow: The rate at which a fund discovers and evaluates new deals.
Key Man Risk: Referred to as the risk associated with depending on a single charismatic individual in a startup;the key tactic is to build a strong capable team around the individual, usually the founder, to mitigate this risk.
Market Share: Market share is the percent of total sales in an industry generated by a company. This metric is used to give a general idea of the size of a company in relation to its market and competitors. It is calculated by taking the company's sales over the time period and dividing it by the total sales of the industry over the same period. A useful framework to
Total Addressable Market (TAM): The overall revenue opportunity for a product or service
Serviceable Addressable Market (SAM): The part of the TAM that can actually be reached given the companies specific offerings and geographical reach
Serviceable Obtainable Market (SOM): The part of the SAM that can actually, reasonably be captured; the market size of your expected customer base
Participating Preferred Stock: A class of stock with a Liquidation Preference, where on the liquidation, sale or merger of the company, the owner has the right to share on an equal basis with holders of Common Stock any money or other assets that remain for distribution after payment of the Liquidation Preference of the Preferred Stock. With Nonparticipating Preferred Stock, the holders of Preferred Stock must choose either to receive their Liquidation Preference or to receive the same distribution holders of Common Stock receive. A holder of Participating Preferred Stock doesn’t have to choose and receives both.
Pre-Money Valuation: The theoretical value of a company before investment. Pre- Money Valuation is calculated by multiplying the number of Fully Diluted shares of the company before the investment transaction by the purchase price per share in the investment transaction. If a company has a pre-money valuation of $4M and you invest $1M, you have a 20% stake in the company ($1M/$5M = 20%).
Post-Money Valuation: The value of a company after the investment round. (Pre-Money valuation) + (investment amount for the round).
Revenue: Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise.
Revenue Multiple: TEV/TTM Revenue, usually used for valuing a company when it’s not profitable yet. (TEV = total enterprise value, TTM = Trailing Twelve Months)
Roll Up: A Rollup (also “Roll-up” or “Roll up”) is a process used by investors (commonly private equity firms) where multiple small companies in the same market are acquired and merged. The principal aim of a rollup is to reduce costs through economies of scale.
Runway: The amount of time until a startup runs out of money. Determined by dividing the current cash position by the burn rate. For example, if a company’s cash position is $100,000 and it costs $10,000 per month to run the company (that’s the burn rate), then the runway is 10 months.
Gross Margins: In percentage terms, (Revenue - COGS) / (Revenue) * 100. Companies that have low COGS (Cost of Goods Sold), like SaaS companies, generally enjoy much higher margins than hardware companies and those with high product costs like physical distribution companies.
Negotiating the Deal
Term Sheet: Once a VC decides they’re interested in investing, a term sheet is sent to the startup’s founder(s) to give both sides of the table a (relatively) short, simple summation of the points that they already agreed on. Although term sheets are non-binding, they are one way to demonstrate that negotiations are progressing. An example of a Series A term sheet can be found here: Series A Term Sheet Information and Example.
Come Along Rights: Sometimes also called Tag Along Rights. The right of an investor to sell shares, if a founder or other key employee sells shares. This right is designed to protect the investors against being trapped in an investment after the founders have cashed out.
Control Rights: Rights of an investor or shareholder relating to control over the company’s affairs. Control rights typically relate to voting or designation of board seats, voting (e.g., does a class of security give the holder 10 votes per share or one?), and certain actions (e.g., incurring indebtedness) which require the consent of a majority of a certain class or series of security.
Covenant: The obligation in a contact to do something. An obligation to refrain from doing something is called a Negative Covenant. For example, the obligation to obtain life insurance on key employees is a covenant and the obligation to not deviate from the budget approved by investors is a negative covenant.
Cumulative Dividend: If the dividend is not declared during the period stated in the corporate charter, the dividend accrues and is payable in a later period. If a dividend right isn’t cumulative, the dividend would be lost forever if it’s not declared during the period stated in the corporate charter. Accrued but unpaid dividends are sometimes convertible into shares of Common Stock.
Piggyback Registration Rights: The right of investors to have shares included in a public offering the company plans to conduct for itself or another shareholder. Usually, this applies to an unlimited number of offerings until the registration rights terminate
.Cutback Rights: Where shareholders exercise piggyback registration rights, but there are too many shares for the underwriters to sell in the public offering without adversely affecting the price, cutback rights determine whose shares are left out of the offering and whose shares are included in the offering.
Demand Registration Rights: The right of investors to require the company to register the investors’ shares for sale to the public even if the company was not otherwise planning to conduct a public offering. Usually, an investor or group of investors receives one or two Demand Registration Rights. Typically, the right isn’t exercisable until after the company’s initial public offering or after a stated time period.
Drag-Along Rights: The right of the owners of a specified percentage of the shares of the company to require other shareholders to sell their shares or to vote their shares to approve the sale of the company. This prevents one group of shareholders from blocking the sale of the company to someone who is only interested in purchasing 100% ownership of the company.
First Refusal Rights: The right to accept or refuse the purchase of stock in future offerings by the company before third parties have access. ,the right is designed to enable investors to maintain their percentage ownership of the company by purchasing a pro rata share of all new stock sold by the company. Investors also often require company founders to grant first refusal rights on shares the founders own. Also sometimes called Preemptive Rights.
Grandfather Rights: A grandfather clause (or grandfather policy) is a provision in which an old rule continues to apply to some existing situations while a new rule will apply to all future cases. Those exempt from the new rule are said to have grandfather rights or acquired rights or to have been grandfathered in.
Information Rights: The right of investors to have the company provide financial information annually, or monthly and other information as requested by investors. Under Delaware (and most state) law, a stockholder has the right to inspect and make copies of the corporation’s information, including their stock ledger, a list of stockholders, and its books and records. However, such a demand must be for a “proper purpose”, which means a purpose reasonably related to the person’s interest as a stockholder.
Investor’s Rights Agreement: An agreement that is frequently required by early, or large, investors in a company. This agreement may include many provisions, such as “First Offer” (the right, but not the obligation, to participate in future fundraising rounds) and “Observer Rights” (the right to observe board meetings). This provision is relevant to shareholders because it may include a separate right of first refusal for investors.
Key Man Clause: Clause in the LPA that enables the LP to break the agreement if one of the major GPs in the fund leave.
Key Man Insurance: Insurance on the life of key employees which investors require the company to obtain.
Letter of Intent (LOI): A letter of intent (LOI) is similar to a memorandum of understanding (MOU) in that is is a common agreement between businesses (including startups) and potential customers to define commitment, interest, terms, and pricing in writing prior to delivering the good or service. This document is used to clarify the understanding of both the customer and founder and often used to show investors. LOI and MOU agreements are used interchangeably and usually non-binding. At times, in working with customers on large projects with multiple phases where the customer and business work together before payment and services are exchanged an MOU may be used before an LOI is used to define pricing and terms. ,see Memorandum of Understanding (MOU).
Memorandum of Understanding (MOU): The memorandum of understanding (MOU) is a common agreement between startups who are pre-product and potential customers to define commitment, interest, terms, and pricing in writing prior to delivering the good or service. LOI and MOU agreements are used interchangeably and usually non-binding. At times the MOU is used in partnerships to define working relationships where no financial exchange is yet made. At times, in working with customers on large projects with multiple phases where the customer and business work together before payment and services are exchanged an MOU may be used before an LOI is used to define pricing and terms. This document is usually also used to clarify the understanding of both the customer and founder and often used to show investors. See Letter of Intent (LOI).
Non-Binding: Refers to the depth of the legal commitment of the document. Term sheets, Memorandums of Understanding (MOUs), Letters of Intent (LOIs) are non-binding documents of which the investor or startup can back out of the intended agreement. The etiquette in venture is to provide a term sheet and once the founder agrees to the term sheet move to execute the investment. It is not common for investors to back out of agreements once a term sheet is issued.
‘No Shop’ Clause: The clause in a term sheet that states to the founder they are not to share the term sheet with other investors in order to receive a competing offer. This is a standard clause. The etiquette in venture is to give founders about a week or less for a decision on a term sheet to limit the time founders have to unofficially ‘shop around’ the deal.
Side Letter: An agreement between the fund and the individual investor.
Non-Disclosure Agreement (NDA): An agreement issued by entrepreneurs to protect the privacy of their ideas when disclosing those ideas to third parties such as investors.
Over Allotment Option: The right of investors to exercise the First Refusal Rights and Come Along Rights of other investors who don’t exercise their own rights.
Preemptive Rights: Similar to rights of first refusal. The term preemptive rights refer to the right to purchase a company’s new shares before they are offered to anyone else. In term sheets the preemptive rights provision may be titled “Right to Participate Pro Rata in Future Rounds”. This is standard in term sheets.
Protective Provisions: The right of an investor or group of investors to veto certain transactions by the company. This is usually achieved by prohibiting certain transactions unless they are approved by a class vote of the Preferred Stock.
Redemption Rights (Redeemable): The right of the investor to require the company to repurchase the investor’s stock for a price specified in the corporate charter. Redemption rights usually are not exercisable until five years or longer after the investment. Redemption rights are rarely exercised, but they give investors leverage to ensure their investment will eventually become liquid throughthe sale of the company if an IPO hasn’t occurred by a specified date.
Use of Proceeds: Generally VCs try to place limits on what the startup can use the investment funds for. During a negotiation, startups will typically try to keep these terms as broad as possible.
Convertible Debt: This is a way for a company to raise capital while delaying valuation: these notes can be converted into equity at a later date (usually a later round of funding). The investors who invest at this time usually receive a warrant (discount) on the equity as a reward for investing at this early/risky time.
Senior Liquidation Preference: An entitlement given to a certain class of shareholders that grants them a higher liquidation preference over other shareholders. (also known as “Stacked Preference”)
SAFE: A SAFE or safe stands for a “simple agreement for future equity”. This document was authored by Y Combinator lawyer Carolynn Levy and open-sourced. It was created and published as a simple replacement for convertible notes. In practice, a SAFE enables a startup company and an investor to accomplish the same general goal as a convertible note, though a SAFE is not a debt instrument.
Shareholder Limit: A requirement that private companies register with the SEC (established by Section 12(g) of the Exchange Act)
Shares Outstanding: The stock currently held by a company’s shareholders, including its institutional investors and restricted shares owned by the company’s executive team. It can be used to calculate a company’s market capitalization, earnings per share (EPS, and cash flow per share (CFPS). Also referred to as “Capital Stock” on a company’s balance sheet.
Stock Option: The right to purchase or sell shares of a stock at a specific price in a specified period of time. These are often used as long-term incentive compensation for management and employees at high-growth companies.
The Quantitative Stuff
Capital Efficiency: The relationship between how many expenses are incurred by the company to how much money is used to produce a good or service. It is one way to measure how far an investor’s money is going.
All other things equal, a company that turns $100 of capital into $1,000 of revenue is better than a company that turns $100 of capital into $500 of revenue.
CAGR (Compound Annual Growth Rate): The constant rate of return for a given investment over a period of time. In the equation below, the value for t determines the time reference for CAGR (i.e. months versus years)
CAGR = (Final Value / Initial Value)(1/t) - 1
Internal Rate of Return (IRR): This is how a fund lets its investors know how well their investments are performing.
Capital Asset Pricing Model (CAPM): A financial investing model that helps investors calculate potential investment returns based on risk level.
PEG Ratio: Ratio of (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company’s expected growth.
Option Pool: A set of shares (usually common stock) set aside for future employees and advisors so the startup can better attract top talent. The option pool is dilutive. Usually 10-20% of common shares are set aside for the option pool.
Reverse Dilution: When stock is returned to a company by departed employees whose stock has not yet vested.
Return on Investment (ROI): The proceeds from an investment during a specific time period, which are calculated as a percentage of the original investment.
Dilution: The reduction in total percent ownership of a given shareholder in a company due to the issuance of new shares. This can happen in subsequent funding rounds or if convertible securities were executed, or stock options were exercised.
e.g. you have a 20% stake in a $1M company following a Seed round. In the Series A round, the company raises $2M at an $8M valuation, you choose to not participate, and the post-money value is now $10M. Now, you have a ~15% stake in the company.
Beta: A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole. It is used in the capital asset pricing model.
A company with a beta of “1.0” matches the S&P 500’s movements
<1.0 = less severe downturns than the S&P 500 but also less severe upturns
>1.0 = hold on to something, more severe movements compared to the S&P 500
To learn more about these terms and additional content, explore AIN’s educational content here. If you have additional questions, please contact Emily McMahan (Emily@academyinvestor.com) or Sherman Williams (Sherman@academyinvestor.com).