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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 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.






2. 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






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






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






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. 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






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






8. 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






9. 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.






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






11. How you get out






12. 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.).






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






14. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






15. 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






16. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






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






18. An IPO that has met certain






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






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






21. Term sheet for equity offering






22. 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.






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






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






25. 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






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






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






28. 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






29. 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.






30. 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






31. 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






32. 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






33. 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






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






35. 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






36. Compound internal rate of return.






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






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






39. 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






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






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






42. 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






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






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






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






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






47. 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






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






49. 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






50. 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.