Some legal forms do a better job of facilitating some forms of investments. Any lawyer worth their salt would, of course, say, “it depends…”

Alternative Lending Platforms

A broad term used to describe financial channels that provide loan options to consumers and business owners outside of a traditional financial systems of regulated banks and capital markets

Primary purpose of intermediary: Channel capital from Investors to enterprises

Asset Management Firms

Firms that invest clients’ capital for them and provide investors more diversification and investing options than they would have on their own

Primary purpose of intermediary:
Pool capital to increase efficiency and reduce risk

Broker Dealers

Firms that buy and sell securities on their own account as a principal before selling those same securities to customers

Primary purpose of intermediary:
Facilitate exchange across scope and scale

Business Incubators and Accelerators

Organizations that are setup to nurture small startup enterprises by providing services that they may not have access to on their own

Primary purpose of intermediary:
Provide knowledge and access to opportunity

Commercial Banks

An institution that provides services such as accepting deposits, making loans, and offering basic investment products to businesses

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Community Development and Finance Institutions

Referred to as CDFIs, these private sector financial institutions focus on personal lending and business development efforts in local communities. Internationally referred to as Non-bank financial institutions (NBFIs).

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Credit Unions

An institution that operates similarly to a bank but is owned by members in the form of a cooperative and gives members governance rights

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Crowdfunding Platforms

Internet platform that provides a way for a large number of people to provide money in small increments in support of a person, project, or entity

Primary purpose of intermediary:
Channel capital from Investors to enterprises


A marketplace in which securities, commodities, derivatives, and other financial instruments are traded

Primary purpose of intermediary:
Facilitate exchange across scope and scale

Family Offices

Financial institutions that manage the family wealth of high net worth individuals

Primary purpose of intermediary:
Provide knowledge and access to opportunity


These are usually created by a single primary donation from an individual or a business. They generate income by investing an initial donation and disbursing 5% or more of total assets to charitable activities and organizations.

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Merchant Banks and Investment Banks

These institutions facilitate large, complex investments by providing a range of services including raising capital, negotiating mergers and acquisitions, underwriting risks or acting as agent in issuing securities to the public

Primary purpose of intermediary:
Facilitate exchange across scope and scale

Microfinance Institutions

MFI’s provide financial services targeted for poor and low-income clients including savings, credit, insurance, remittances, and payments in amounts considered too small for traditional finance institutions

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Mutuals/Mutual Aid Societies

This member-owned organization provides insurance or financial services to the group of members; any profits made are used to improve the products and services it provides

Primary purpose of intermediary:
Pool capital to increase efficiency and reduce risk

Non-Bank Financial Institutions

Commonly referred to as NBFI’s, they provide bank-related services but do not have a full banking license and are not supervised by a national or international banking regulatory agency

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Pension Funds

These types of funds are the accumulated contributions from employers, employees, or both from which payments are drawn through periodic payments after employee’s retirement

Primary purpose of intermediary:
Pool capital to increase efficiency and reduce risk

Wealth Advisors

An investment-advisory entity that includes financial planning, investment portfolio management and a variety of financial services to high net worth individuals and families

Primary purpose of intermediary:
Provide knowledge and access to opportunity

Private Equity Firms

These organizations make direct investment into companies through investment strategies such as leveraged buyouts, venture capital, and growth capital

Primary purpose of intermediary:
Pool capital to increase efficiency and reduce risk


A temporary group of professional financial services formed to handle large transactions that would be difficult for an individual company to manage and to allow members to pool resources and share risks

Primary purpose of intermediary:
Facilitate exchange across scope and scale

Non Governmental Organization

A non-profit, citizen-based group that functions independently of national governments. They are largely funded by donations or volunteer-driven

Primary purpose of intermediary:
Provide knowledge and access to opportunity

Development Finance Institution

DFI’s provide finance to the private sector for investments that promote development and to help companies to invest in countries with limited markets

Primary purpose of intermediary:
Channel capital from Investors to enterprises

Expectations for return are calculated by measuring potential risks over time, and then subtracting the cost of the investment.


A structure that allows members to have share in ownership and the decision making process of an organization and may potentially allow non-member money

Cooperative Societies (UK), Fraternals (US)


A company or group of people authorized to act as a single entity (legally a person) where each shareholder is taxed on the dividends on their shares

International Corporation, Transnational Corporation, Stateless Corporation, Multinational Corporation


An association of individuals or entities that join together to conduct business and each partner has unlimited liability

Joint Venture, General Partner (UK)


A business organization that allows for significant flexibility in how members organize themselves and allows for passed-through taxation

LLC or LLP (US), Private Limited Company (UK)

Holding Companies

This type of company owns enough voting stock in other companies to control policies and management. They exist for the purpose of owning property, such as real estate, patents, trademarks, and other assets

Parent Company

Individuals (With a Bank Account)

Anyone who holds a bank account can issue loans and therefore can enter into a legally binding financial contracts

Sole Proprietorship

General Partners

A general partner is an owner that has unlimited liability and is active in the day to day operations, usually as a managing partner

Limited Partners

An ownership arrangement that includes at least one General Partner that has unlimited liability for the debts and liabilities of the partnership and at least one Limited Partner whose liability is generally limited to his/her investment in the partnership

Limited Partnership (Canada)

Not for Profit Organizations

An organization that does not have owners and is usually formed to achieve some charitable, educational or civic purpose; money earned by or donated to a not for profit organization is used in pursuing the organization’s purpose or mission and may be closely regulated by the state

501c3, Charitable Entity, Mutual Society, Non Governmental Organization

Social Purpose Companies

A form of corporation where the board is permitted or mandated to consider the interests of stakeholders other than shareholders

Community Interest Company (UK)Benefit Corporation (US)

Sole Proprietors

The exclusive owner of a business, entitled to keep all profits after tax has been paid. They are simple and cheap to set up, but owners are personally liable for all losses

Financial instruments are rightly thought of as vehicles because they make capital move. Vroom Vroom!

Commercial Paper

A short-term debt security issued by financial companies and large corporations. Companies sell commercial paper when they need a short-term loan to pay for such things as accounts payable and inventories. Corporate debt that matures in less than one year is typically called commercial paper.

Convertible Debt

When a company borrows money from an investor and the intention is to convert the debt to equity at some later point.


An arrangement or instrument (such as a future, option, or warrant) whose value is derived from and is dependent on the value of the underlying asset

Direct Public Offerings

When a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors, and friends in the community. Sometimes referred to as investment crowdfunding.


The responsibility taken for payment of a debt or performance of some obligation if the entity primarily liable fails to repay


A payment for future losses is guaranteed by way of collecting small sums of money from various people and organizations into a collective fund. That that can then be drawn upon in the event one of its members is adversely affected by a predefined risk (example auto, health, and flood insurance)

Interest Rate Swaps

In this derivative two parties agree to exchange interest rate cash flows based on a specified notional amount, from a fixed rate to a floating rate, or one floating rate to another

Mergers or Acquisition

The use of debt, equity, and hybrid financing techniques to acquire a company or merge two companies together. The focus of acquisition finance is on identifying the optimal financing solution.


A written promise stating that the maker will pay the holder regular sums of money with or without interest for a specified amount of time and can be either backed by assets (secured) or not backed by assets (unsecured)

Project Finance

The long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors


An investor’s ownership position in a publicly-traded corporation. This could be a stock, bond, or an option. It’s a way to represent the relationship between parties


A fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary.

Program Related Investments

PRIs are made by foundations from their grant disbursement to support charitable activities that involve the potential return of capital within an established time frame

Mission Related Investments

MRIs are drawn from the corpus of the foundation and support a positive social or environmental impact, while generating reasonably competitive rates of financial return

Initial Public Offerings

This is the first sale of stock by a private company to the public. IPOs are used by smaller companies to raise money or by larger private companies looking to be publicly traded.

Trade Finance

Reconciles the needs of the importer and exporter by financing international trade through lending, issuing letters of credit, factoring, export credit and insurance


An interest-bearing, discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific time intervals, and to repay the principal amount of the loan at maturity

Sovereign Bond

These are bonds issued by governments. They can be either local-currency-denominated or denominated in a foreign currency. Sovereign bonds and sovereign debt can be used interchangeably, but sovereign debt can also refer to the total outstanding stock of a country’s government debt

Equity Investment

Investments made by individuals or firms through buying and holding of stock in anticipation of income from profit in the form of dividends or capital grants


Capital transfers in cash or in kind payments made by governments or foundations to organizations to finance all or part of the costs of a project, without the expectation of a return of capital


A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly


A type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank

How might changing a document be a subversive act?

Term Sheet

A document that outlines the material terms and conditions of a business agreement. It guides legal counsel in the preparation of a proposed “final agreement”

Subscription Agreement

an investment at a certain price; and a promise by the company to sell shares at that price

Sale and Purchase Agreement

A legal contract that obligates a buyer to buy and a seller to sell a product or service

Loan Agreement

A contract between a borrower and a lender that regulates the mutual promises made by each party

Stock Pledge Agreement

Documents the potential transfer of stocks against a debt. For example, margin loans

Operating Agreement

An agreement among limited liability company (“LLC”) members governing the LLC’s business, and members’ financial and managerial rights and duties

Partnership Agreement

A contract between partners in a partnership which sets out the terms and conditions of the relationship between the partners

Shareholders' Agreement

A contract between the shareholders of a corporation, although more often the relationships are regulated by the constitutional documents of a company

Security Agreement

Provides a lender a security interest in a specified asset or property that is pledged as collateral

Investment Policy Statement

A document (also known as a IPS), generally between an investor and the investment manager or consultant, recording the agreements the two parties come to with regards to issues relating to how the investor’s money is to be managed

Letter of Agreement

A written list of goods, services, or space to be provided at the agreed-to prices, terms, and time. Once signed by associated parties it is a binding contract

Memorandum of Understanding

Mutually understood terms and conditions of a partnership or agreement, often referred to as an MOU

Non-Disclosure Agreement

A legal contract (referred to as an NDA) between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but restrict access to or by a third party

Private Placement Memorandum

A legal document (also referred to as an offering memorandum or PPM) that is provided to prospective investors when selling stock or other security in a business that are sold to investors and not for resale

Request for Proposal

A solicitation (also known as an RFP), often made through a bidding process, by an agency or company interested in getting a commodity, service, or valuable asset, to potential suppliers to submit business proposals


A printed document that advertises a commercial enterprise in order to attract or inform clients, members, buyers, or investors

The substance of the investment (and a bunch of the power) is in the details!

Reporting and Communication

Predetermined form and schedule for reporting and communicating with investors or other stakeholders. This outlines rights investors have to information about the company


A percentage or unit of ownership in a company or mutual fund; usually issued to the shareholder in the form of a certificate


A return paid regularly (typically quarterly) to shareholders out of a company’s profits or reserve


A return in addition to the basic value, due to additional factors such as the investor’s willingness to assume risk


Return based on revenue or cash flow tied to a particular product or asset in the company

Termination Clauses

A section of a contract that describes what will happen if the contract ends early or in default

Voting Rights

The right to vote on or veto corporate or company policy and who will make up the board of directors


The right but not the obligation to buy or sell a share or security at a certain date before expiration


Money held by a third party on behalf of transacting parties

Maturity Date

The final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid

Term Length

The timing for the duration of an investment, and how long the terms are expected to be upheld


A stream of payments that comes from a structured payout at some future time


The annual interest rate paid on a bond, expressed as a percentage of the face value


Agreements to buy or sell a specific amount of a commodity, currency, or a financial instrument at a particular price on a predetermined future date

Interest Rate

Percentage of a loan that is charged to the recipient of the loan for the use of the money

Options (Puts and Calls)

The rights to buy or sell property that is granted in exchange for terms that are agreed upon. A call allows the owner to buy at a certain price. A put option allows the owner to sell at a certain price

Antidilution Clause

A provision in an option or convertible security that protects an investor from equity dilution resulting from later issues of stock at a lower price than the investor originally paid

Liquidation Preference

Determines who gets paid out first and how much when a company is liquidated. Used to allow venture capitalists to claim profits or get initial investment back before those who invested later

Tag Along Rights

Pre-negotiated rights that allow minority shareholder to sell his/her share if a majority shareholder is selling their share. Majority shareholders are often able to facilitate what would otherwise be a difficult sale


Process of acquiring rights gradually over time. The rights could include benefits such as pension contributions or equity participation, such as stock options

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