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






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






3. The way you buy stock






4. 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.






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






6. 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






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






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






9. 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.






10. 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






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






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






13. 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






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






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






16. 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






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






18. 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.






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






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






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






22. 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.






23. 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






24. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






25. Compound internal rate of return.






26. 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.






27. 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






28. How you get to vote






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






30. 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






31. 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.






32. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






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






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






35. 'I will buy stock at price we negotiate'






36. 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 -






37. 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






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






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






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






41. The value at which an asset is carried on a balance sheet (the cost of the item)






42. 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






43. 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.






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






45. 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






46. 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.






47. 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.






48. Term sheet for equity offering






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






50. How you get out