Dry Powder

AAA

DEFINITION of 'Dry Powder'

A slang term referring to marketable securities that are highly liquid and considered cash-like. Dry powder may also refer to cash reserves kept on hand to cover future obligations or purchase assets, if conditions are favorable. Securities considered to be dry powder could be Treasuries, or other fixed income investments, and can be liquidated on short notice, in order to provide emergency operational funding or allow an investor to purchase assets.

INVESTOPEDIA EXPLAINS 'Dry Powder'

Having dry powder on hand can provide businesses and investors with an advantage over others holding less liquid assets. For example, if a venture capitalist expects IPO markets to sour, you might hear him say something like, "we want to keep enough dry powder around to keep funding our companies through these hard times."

RELATED TERMS
  1. Cash Reserves

    In finance, cash reserves primarily refers to two things. One ...
  2. Burn Rate

    The rate at which a new company uses up its venture capital to ...
  3. Drill-Bit Stock

    A term used to describe shares that trade for prices less than ...
  4. Seed Capital

    The initial capital used to start a business. Seed capital often ...
  5. Dumbbell

    A method of investing in bonds so that the majority of an investor's ...
  6. Venture Capital

    Money provided by investors to startup firms and small businesses ...
Related Articles
  1. The Essentials Of Corporate Cash Flow ...
    Retirement

    The Essentials Of Corporate Cash Flow ...

  2. Free Cash Flow: Free, But Not Always ...
    Markets

    Free Cash Flow: Free, But Not Always ...

  3. Cash Flow On Steroids: Why Companies ...
    Markets

    Cash Flow On Steroids: Why Companies ...

  4. Having A Plan: The Basis Of Success
    Options & Futures

    Having A Plan: The Basis Of Success

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center