Private Capital Glossary
Key terms and definitions used across private equity, venture capital, private credit, and institutional investing.
A
AI Deal Sourcing
The use of artificial intelligence to discover, filter, and prioritise investment opportunities based on a fund's thesis. Replaces manual triage with automated signal detection.
AI Due Diligence
Automated analysis of companies during the investment evaluation process. AI extracts, structures, and cross-references data from pitch decks, financials, and public records.
AIF (Alternative Investment Fund)
An investment fund that raises capital from investors to invest in accordance with a defined investment policy, other than a UCITS in Europe. In India, AIF is a formal regulatory category under SEBI.
AIFM (Alternative Investment Fund Manager)
The legal person managing one or more alternative investment funds. In the EU and UK the manager is subject to a specific authorisation and conduct regime.
Audit Trail
A chronological record of all actions, decisions, and data changes within an investment platform. Essential for regulatory compliance and LP transparency.
B
Bridge Financing
Short-term capital provided to a company between funding rounds or ahead of a liquidity event, typically as a convertible note or short-dated loan.
Buyout
A control or majority transaction where a private equity fund acquires a company, typically using a mix of equity and debt, with the goal of operational improvement and exit within 5 to 10 years.
C
Cap Table
A capitalisation table showing the equity ownership, dilution, and value of equity in a company across each round of investment.
Capital Call
A formal request from a fund to its limited partners to contribute previously committed capital, typically to fund a new investment or expense.
Carried Interest
The performance-based share of fund profits paid to the general partner, typically calculated after LPs have received their invested capital and a preferred return.
Closed-End Fund
A fund with a fixed term and a defined investment period, after which no new commitments are accepted. Typical structure for private equity and venture capital.
Co-Investment
When limited partners invest directly alongside a general partner in a specific deal, typically with reduced or no management fees.
Commitment
The amount of capital an LP contractually agrees to invest in a fund over its life, drawn down through capital calls.
Continuation Fund
A GP-led secondary structure where one or more assets are moved from an existing fund into a new vehicle, allowing the GP to continue managing the assets while existing LPs choose to roll, sell, or take a structured option.
Continuous Diligence
Continuous diligence is the repeated review of investment evidence as new information or material events arise, rather than a one-off check before approval. The review cadence and triggers should reflect the investment and its unresolved questions.
Continuous Market Research
Continuous market research is the ongoing tracking of companies, funds, managers and sectors against an investment thesis, rather than a one-off report. New evidence attaches to the same record, so the view a team takes into diligence is current and sourced.
Convertible Note
A short-term debt instrument that converts into equity at a subsequent priced round, typically with a valuation cap and discount.
Covenant Headroom
The buffer between a borrower's current financial metrics and the limits set by covenants in the credit agreement. Diminishing headroom signals rising default risk.
Covenant Monitoring
Tracking compliance with financial and operational covenants in credit agreements. Critical for private credit and debt fund managers.
D
Data Room
A secure digital repository where companies share confidential documents with prospective investors during due diligence.
Deal Flow
The rate at which investment opportunities are presented to a fund. Quality deal flow is thesis-aligned and actionable, not just high-volume.
Deal Pipeline
The structured progression of investment opportunities from initial sourcing through screening, due diligence, IC review, and closing.
Deal Sourcing Directory
A curated database of mid-market and SME acquisition opportunities. Reuben AI's Mid-Market Directory surfaces established businesses for PE and corporate acquirers, with AI-supported evaluation and sector filtering.
Deal-Level Diligence
Deal-level diligence tests the transaction itself, including co-investments and direct deals: price, terms, rights, structure and conditions, and how the deal fits the mandate, separately from diligence on the asset being bought.
Decision Audit Trail
A decision audit trail is a chronological history of the evidence, changes, reviews and approvals that led to an investment decision. It should distinguish what was known at the time from information added later.