12 of the Most Jargon Laden Terms Explained

Twelve Days of a FinTech Christmas

12 of The Most Jargon Laden Terms Explained

In the world of business and finance, you’ll be aware that everyone uses jargon and acronyms.

Here at Shadow Foundr (the online investment platform that puts the investors interests first), we’ve put together a glossary of the twelve most common business terms and acronyms, so that in 2018 when FinTech goes crazy you will know what they’re all talking about.

AI: Artificial Intelligence. Intelligence displayed by machines, in contrast to the natural intelligence displayed by humans and other animals. Artificial Intelligence is based on algorithms, which makes it different from human intelligence, which is takes place in our brains.

Blockchain: The blockchain is a decentralised ledger in which all transactions made are recorded chronologically and publicly. Cryptocurrency utilises blockchain for security purposes.

Cryptocurrency: Online digital currency used as a method of exchange, but which isn’t owned by anyone i.e. the government. Cryptocurrency began getting mainstream media attention in 2017 due to the rising cost of Bitcoin, the biggest form of Cryptocurrency, which went from just under $1000 to well over $10000 in the space of just a year.

De-risk: Does what it says on the tin. De-risking is the process of taking steps to reduce risk, for example, in investment. It’s impossible to eliminate risk entirely, but there are methods of mitigating risk, such as choosing a business where the founder has a good reputation, and finding out as much information as possible about the business plan.

Disruptive Technology: Technology that changes the sector it operates in, by being totally fresh and unique. An example of disruptive technology is the mobile phone. Prior to its existence, calls were made via landlines and consisted of two people speaking from their homes or offices. Nowadays, mobile phones are more like computers, they have cameras, and can be used anywhere. This drastically changed the telephone and communication sector.

EIS: Similar to SEIS, EIS stands for Enterprise Investment Scheme. The principles are the same, but with the EIS scheme, investors can claim 30% income tax relief on investments up to £2m per tax year. Any gain is also free of Capital Gains Tax (CGT), providing they hold the shares for three years or more.

Fintech: A portmanteau word (a blend of two words – think breakfast + lunch = brunch). Fintech is a mixture of Finance and Technology, and relates to any tech you may use that involves money. Most people have Fintech without realising it, such as an online banking app on their phone, or a money transferring app on their tablet.

HNW: High-net-worth, referring to an individual whose net worth (generally) is greater than or equal to $1m.

Illiquid: Refers to assets. If an asset has become illiquid, it means that it is hard to sell or exchange the stocks without making a substantial loss. This can be due to a change in the market, or a lack of willing investors.

PFI: Private Finance Initiative. A way of creating “public–private partnerships” (PPPs) where private firms are contracted to complete and manage public projects. PFI is linked to privatisation and financialisation.

SEIS: Seed Enterprise Investment Scheme. A government-led scheme to encourage investors to put money into businesses. If an investor injects money into a business on the SEIS scheme, they will be eligible for income tax relief of 50% on investments, up to £100k per tax year. They will also get certain CGT benefits.

VC: Venture Capital. Venture capital is financial support that investors provide to start-up companies and SMEs that they believe to have long-term growth potential.

Jason Kluver is the COO for Private Investor Network Shadow Foundr

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