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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. 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.).






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






3. 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.






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






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






6. 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






7. 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






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






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






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






11. 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.






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






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






14. Term sheet for equity offering






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






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






17. The value at which an asset is carried on a balance sheet (the cost of the item)






18. 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.






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






20. How much the company is worth before an investment






21. 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.






22. 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.






23. 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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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. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






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






27. 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






28. 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.






29. 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






30. The residual ownership in a company like a corporation or LLC 51%=control






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. 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






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






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






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






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






37. This refers to a synopsis of the key points of a business plan.






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






39. 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






40. 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.






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






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






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






44. 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






45. 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.






46. 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.






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






48. 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






49. 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.






50. 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