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






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






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






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






5. 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






6. An IPO that has met certain






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






8. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c






9. 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






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






11. 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






12. 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.






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






14. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






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






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






17. 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






18. 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






19. Compound internal rate of return.






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






22. 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






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






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






25. 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






26. 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






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






29. 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.






30. 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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31. 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.






32. 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.






33. 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.






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






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






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






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






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






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 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.






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






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






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






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






45. 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






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






47. 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.






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






49. 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






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






Can you answer 50 questions in 15 minutes?



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