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






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






3. 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


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






5. 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.






6. 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






7. 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.






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






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






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






11. 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.






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






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






14. The way you buy stock






15. 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.






16. 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.






17. 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.






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






19. The total value of the company immediately prior to the latest round of financing






20. 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.






21. 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






22. The internal rate of return on an investment.






23. 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.






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






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






26. 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






27. No double tax - Limited number of investors






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. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






30. 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.).






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






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






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






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






35. 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






36. 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.






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






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






39. Cannot get other outside investors-No Shop






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






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






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






43. 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






44. 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






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 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 -






47. 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.






48. 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






49. 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






50. 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.