Test your basic knowledge |

Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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.






2. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






3. 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.






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






5. 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.).






6. How you get out






7. 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






8. The internal rate of return on an investment.






9. 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) ...






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






11. 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






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






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






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






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






16. 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






17. How you get to vote






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






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






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






21. 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.






22. 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.






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






24. 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.






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






27. Cannot get other outside investors-No Shop






28. No double tax - Limited number of investors






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






30. 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.






31. 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.






32. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






33. Compound internal rate of return.






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






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






36. 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






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






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






39. 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.






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






41. 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






42. 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.






43. 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






44. 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






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






46. How much the company is worth before an investment






47. 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






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






49. 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.






50. 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