The words, without the fog.
This industry hides a lot behind vocabulary. Every term below is one you will meet if you raise or invest in a private company in India, explained the way we would explain it across a desk.
Private placement
An offer of securities made to a selected group of identified people rather than to the public. Governed by Section 42 of the Companies Act, 2013. Capped at 200 subscribers per company, per class of security, per financial year, and it must not be advertised publicly.
Section 42
The provision of the Companies Act, 2013 that governs private placements. It sets the 200-person cap, requires an offer letter in Form PAS-4 issued to named individuals, and requires that money be received into a separate bank account of the issuing company.
PAS-4
The prescribed private placement offer cum application letter. It is addressed to a specific named person — that naming is what makes the offer private rather than public.
PAS-3
The return of allotment, filed with the Registrar of Companies within 15 days of allotting shares. Until it is filed the allotment is not properly recorded.
Deemed public issue
What a private placement becomes if it breaches its conditions — for example by exceeding 200 persons or by being advertised publicly. The consequences fall on the company that raised the money, which is why gating deal information protects the business, not us.
Accredited Investor
An investor certified by a SEBI-recognised accreditation agency as meeting prescribed income or net worth criteria. Angel Fund participation is restricted to Accredited Investors.
AIF
Alternative Investment Fund. A privately pooled investment vehicle registered with SEBI. Angel Funds are a sub-category. Pooling money is lawful inside a registered AIF and unlawful outside one — that distinction is the whole reason the structure exists.
Angel Fund
A sub-category of Category I AIF that invests in early-stage companies. Since SEBI's 2025 revisions, participation is restricted to Accredited Investors.
CIS
Collective Investment Scheme. A pooled arrangement that requires SEBI registration. An unregistered pooled scheme can be treated as an illegal CIS, which is why we do not pool money outside a registered fund.
BUDS Act
The Banning of Unregulated Deposit Schemes Act, 2019. It makes accepting money from the public against a promise of return, without authorisation, a cognizable and non-bailable offence. It is the reason no page on this website promises a return.
ZCZP
Zero Coupon Zero Principal instrument. Issued by social enterprises on the Social Stock Exchange. It returns neither principal nor interest — it is structured philanthropy, not an investment. Minimum subscription is ₹1,000.
Social Stock Exchange
A SEBI-regulated segment where non-profits and social enterprises raise funds against defined, audited outcomes. It is the only pathway here that is genuinely open to everyone.
Social Auditor
An empanelled professional who verifies whether a social enterprise actually achieved the outcomes it raised money for. Without this verification, impact claims are just assertions.
Cap table
The record of who owns what share of a company. An unclear cap table is one of the most common reasons a raise stalls during diligence.
Pre-money / post-money
Pre-money is what the business is agreed to be worth before investment. Post-money is pre-money plus the amount raised. The investor's percentage is the amount raised divided by the post-money figure.
Dilution
The reduction in your ownership percentage when new shares are issued. You own a smaller slice of what should be a larger pie — whether that trade is worth it depends entirely on the price.
ESOP pool
Shares set aside for employees. Usually created before an investment round, which means it dilutes existing shareholders rather than the incoming investor. Worth checking which side of the round it sits on.
Liquidation preference
The investor's right to be paid first, and sometimes to a multiple of their investment, if the company is sold. Two offers at the same valuation can be worth very different amounts to you depending on this clause alone.
Anti-dilution
Protection that adjusts an investor's shareholding if the company later raises at a lower valuation. The protection comes at your expense, so the formula matters.
Convertible instrument
A security that starts as debt or a preference share and converts into equity later, usually at the next funding round. Common when both sides want to defer arguing about valuation.
Due diligence
The examination an investor performs before committing — financials, compliance, ownership, contracts, litigation. Diligence reduces risk. It does not remove it.
Illiquidity
The characteristic that you cannot easily sell. There may be no buyer for your stake when you want to exit, and no timeline for one. This is the defining feature of unlisted investment.
SME platform
The segments of the recognised stock exchanges where smaller companies list. Once listed, any public investor can buy in — which is how a local business eventually becomes something the whole city can own part of.
Merchant banker
A SEBI-registered intermediary that manages public issues. Required for an SME listing. We are not one and do not act as one — we work on listing readiness, not on the issue itself.
No term matches that. If there is something you think should be here, tell us and we will add it.