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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. 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.






2. 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






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






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






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






6. An IPO that has met certain






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






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






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






11. 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.






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






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






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






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






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






17. 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






18. 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.






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






20. 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 -






21. 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






22. 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






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






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






25. 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.






26. The internal rate of return on an investment.






27. 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.






28. 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






29. 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






30. 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.






31. 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.






32. 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.






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






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






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






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






37. 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






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






39. 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.






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






41. No double tax - Limited number of investors






42. 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






43. 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






44. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






45. 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






46. 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






47. 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






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






49. 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






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