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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 rate at which a company expends net cash over a certain period - usually a month.






2. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.






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






4. 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.






5. 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






6. 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






7. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






8. How much the company is worth before an investment






9. Issue of shares of a company to the public by the company (directly) for the first time.






10. 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.






11. 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






12. Partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment






13. The maximum amount of cash that a partner is required to contribute under the terms






14. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation






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






16. An investment vehicle designed to invest in a diversified group of investment funds.






17. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






19. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






20. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






21. Don't talk to the market about the company






22. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






23. Assets are subject to double taxation - Unlimited number of investors






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






25. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c






26. Money used to purchase equity-based interest in a new or existing company. A venture capitalists return usually comes from preferred stock - a share of profits - royalties or capital appreciation of common stock. Most venture capitalists look for c






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






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






29. The method by which an investor will realize an investment.






30. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






31. Document between general and limited partnership of each fund spells out details of the partnership.






32. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






33. 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.






34. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






35. An IPO that has met certain






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






37. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.






38. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






39. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public






40. 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.).






41. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.






42. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






43. 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






44. The internal rate of return on an investment.






45. Compound internal rate of return.






46. The practice of a large company taking a minority equity position in a smaller company in a related field.






47. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






48. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






49. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






50. A form of equity ownership in a corporation that contains preferences over common stock - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights