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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.
  • 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 class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






2. 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






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






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






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






6. 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






7. 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






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






9. 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






10. 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.






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






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






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






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






15. Pre-money valuation plus the amount invested in the latest round






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






17. 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






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






19. 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.






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






21. 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.






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






23. 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.






24. 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.






25. 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.






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






27. 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.






28. An IPO that has met certain






29. 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.






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. 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. 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






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






34. 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






35. 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.






36. 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






37. 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.






38. 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.






39. 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






40. 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.






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






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






43. The internal rate of return on an investment.






44. 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.






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






46. 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






47. 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.






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






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






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