Funds and assets irrevocably committed to the enterprise and genuinely exposed to loss, including a purchase price paid or held in escrow for release, unrecoverable start-up spending, and equipment bought outright. Ongoing rental or lease payments made from revenue are operating expenses rather than invested capital.
Separate what was committed from what is merely being spent
The distinction that catches people is between capital placed at risk and money that passes through the business month by month. A deposit that is forfeited if the deal collapses is committed. Equipment purchased outright is committed, and its price is evidence.
Salaries paid from trading revenue, monthly rent and instalments on a leased vehicle are the cost of running the business and are not the investment, however large the total becomes over a year. Personal funds and personally secured borrowing can both qualify, while borrowing secured on the assets of the American enterprise itself generally cannot, because the risk sits with the business rather than with the investor. Hypothetical example: a hydroponic lettuce startup counts thirty-six monthly payments on a leased delivery van toward its investment total, and the figure has to be rebuilt from what was actually committed.
Keeping a simple ledger of committed spending from the first payment onward saves reconstructing it from bank statements a year later.