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






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






4. 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.






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






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






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






8. 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






9. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






10. 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.






11. 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






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






13. 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






14. 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






15. 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.






16. No double tax - Limited number of investors






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






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






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






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






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






22. 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.






23. The internal rate of return on an investment.






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






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






26. 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






27. 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.






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






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






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






31. 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






32. 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






33. 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






34. This refers to a synopsis of the key points of a business plan.






35. 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






36. 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.






37. How you get to vote






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






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






40. Assets are subject to double taxation - Unlimited number of investors






41. 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






42. How you get out






43. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






44. 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






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






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






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






48. An IPO that has met certain






49. 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.






50. 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