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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. 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






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






3. 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






4. Compound internal rate of return.






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






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






7. 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






8. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).






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






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






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






12. 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.






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






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






15. Cannot get other outside investors-No Shop






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






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






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






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






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






21. How you get out






22. No double tax - Limited number of investors






23. 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






24. 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






25. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






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






27. 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.






28. 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.






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






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






31. 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






32. 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.






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






34. 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.






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






36. Term sheet for equity offering






37. 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 -






38. 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) ...






39. 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.






40. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






41. 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.






42. The internal rate of return on an investment.






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






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






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






46. 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






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






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






50. 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.