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






2. 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.






3. 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.






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






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






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






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






8. 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.






9. The party that manages a limited partnership and is liable for the debts of the company






10. 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.






11. 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






12. 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






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






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






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






16. 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






17. 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.






18. 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.






19. 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.






20. 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






21. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment


22. 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






23. 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






24. 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 -






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






27. The internal rate of return on an investment.






28. The total value of the company immediately prior to the latest round of financing






29. 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.






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






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






32. How you get out






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






34. 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






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






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






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






38. An IPO that has met certain






39. 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.






40. 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






41. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






42. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






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






44. 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






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






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






47. 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.






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






49. The way you buy stock






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