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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






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






3. 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.).






4. Cannot get other outside investors-No Shop






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






6. 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






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






8. 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.






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






10. 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






11. 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






12. 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.






13. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






14. The internal rate of return on an investment.






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






16. 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.






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






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






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






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






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






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






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






24. How much the company is worth before an investment






25. 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






26. 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.






27. 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






28. The way you buy stock






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






30. 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






31. How you get out






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






33. 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






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






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






36. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






37. 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






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






39. 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.






40. 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.






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






42. 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






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






45. Term sheet for equity offering






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






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






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






49. 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






50. 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