DEFINITION of 'Traunch'

One of a series of fund allotments earmarked for a specific purpose, such as a financing round in a start-up. Traunches are used by venture capital firms as a means of minimizing risk. Some experts believe "traunch" is a misspelling of "tranche", which means a slice or portion, and is used to describe instruments such as mortgage-backed securities that can be sliced into smaller pieces for sale to investors.

BREAKING DOWN 'Traunch'

For example, a development-stage company that has sought venture capital funding may initially receive a $2 million traunch out of a $5 million financing round, with the balance to be received after a month.

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RELATED FAQS
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    "Tranche" is actually a French word meaning "slice" or "portion". In the world of investing, it is used to describe a security ... Read Answer >>
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