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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. 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






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






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






4. 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






5. 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






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






7. 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.






8. 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.






9. 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






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






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






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






13. 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.






14. 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.






15. 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






16. The internal rate of return on an investment.






17. A business owned by stockholders who share in its profits but are not personally responsible for its debts






18. 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






19. 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.






20. No double tax - Limited number of investors






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






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






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






24. An IPO that has met certain






25. 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






26. 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.






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






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






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






30. 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.






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






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






33. 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






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






35. 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.






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






37. 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.






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






39. 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






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






41. 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.






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






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






44. 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






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






46. 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






47. 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.






48. 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 -






49. 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






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






Can you answer 50 questions in 15 minutes?



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