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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. 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.






3. 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






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






6. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






7. 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.).






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






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






10. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






11. The party that manages a limited partnership and is liable for the debts of the company






12. 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.






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






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






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






16. 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






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






18. A study of the background and financial reliability of the company - management team and industry.






19. Letter of intent summarizing the key legal and financial terms






20. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.






21. 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






22. 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.






23. 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






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






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






26. 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.






27. 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.






28. 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.






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






30. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






31. Pre-money valuation plus the amount invested in the latest round






32. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






33. 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.






34. 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






35. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






36. Term sheet for equity offering






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






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






39. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






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






41. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






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






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






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






45. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






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






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






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






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






50. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.