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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. 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.






2. 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.






3. How much the company is worth before an investment






4. 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.






5. 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






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






7. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






9. 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






10. How you get to vote






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






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






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






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






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






17. 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.






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






19. 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.






20. 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






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






22. 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.






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






24. 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






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






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






27. 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.






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






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






30. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






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






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






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






34. 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






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






36. 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






37. 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






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






39. 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






40. An IPO that has met certain






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






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






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






44. 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






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






46. 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






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






48. 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.






49. Term sheet for equity offering






50. Date the LP's subscription is effective and they become partner