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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






2. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






3. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






4. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






5. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






6. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






7. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






8. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






9. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






10. A security with limits on its transferability. Usually issued in connection with a private placement






11. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment

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12. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






13. No double tax - Limited number of investors






14. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






15. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






16. How you get to vote






17. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).






18. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






19. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






20. Investments by a private equity fund in a publicly traded company - usually at a discount.






21. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






22. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






23. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






24. A business owned by stockholders who share in its profits but are not personally responsible for its debts






25. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






26. The amount of this available to a management team for venture investments.






27. The equity ownership in a corporation. Also has basic voting rights






28. Cannot get other outside investors-No Shop






29. The residual ownership in a company like a corporation or LLC 51%=control






30. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






31. How you get out






32. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






33. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






34. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






35. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






36. Selling an interest in your business to an outside party to raise money.






37. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






38. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






39. This refers to a synopsis of the key points of a business plan.






40. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






41. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






42. Compound internal rate of return.






43. This refers to obtaining capital from investors or venture capital sources.






44. The company or entity into which a fund invests directly.






45. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






46. The rate of return or profit that an investment is expected to earn.






47. The first round of stock offered during the seed or early stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of pref






48. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






49. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






50. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.