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






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






3. 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






4. 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






5. 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.






6. 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






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






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






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






10. 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.






11. No double tax - Limited number of investors






12. 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.






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






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






15. 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






16. The method by which an investor will realize an investment.






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






18. 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






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






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






21. Document between general and limited partnership of each fund spells out details of the partnership.






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






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






24. 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






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






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






27. 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






28. 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.






29. 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.






30. Cannot get other outside investors-No Shop






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






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






33. 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.






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






35. 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






36. 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.






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. Selling an interest in your business to an outside party to raise money.






39. 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






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






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






42. 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.






43. 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






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






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






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






47. 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






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






49. 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






50. The way you buy stock