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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 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.






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






3. 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






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






5. 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






6. How you get out






7. 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






8. 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.






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






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






11. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






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






14. Cannot get other outside investors-No Shop






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






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






17. 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.).






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






19. 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






20. 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.






21. 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






22. 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






23. The amount of this available to a management team for venture investments.






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






25. 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.






26. 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.






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






28. 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






29. 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

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30. 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






31. 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.






32. 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






33. 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.






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






35. 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.






36. Compound internal rate of return.






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






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






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. 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






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. 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.






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






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






45. No double tax - Limited number of investors






46. 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.






47. 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) ...






48. 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






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






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