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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 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






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






3. 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






4. 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.






5. Compound internal rate of return.






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






7. A security with limits on its transferability. Usually issued in connection with a private placement






8. 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






9. 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






10. 'I will buy stock at price we negotiate'






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






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






13. 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






14. Term sheet for equity offering






15. 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






16. 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.






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






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






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






20. 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.






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






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






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






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






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






26. 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.






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






28. 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






29. 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






30. The internal rate of return on an investment.






31. 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






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






33. The method by which an investor will realize an investment.






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






35. 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.






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






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






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






39. 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.






40. 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.






41. 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.






42. 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






43. 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






44. How you get out






45. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






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






48. 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






49. 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






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