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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. No double tax - Limited number of investors






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






3. 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






4. 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.






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






6. 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 -






7. 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.






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






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






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






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






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






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






14. 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.






15. 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






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






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






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






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






20. 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






21. 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.






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






23. 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.






24. 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.






25. 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






26. An IPO that has met certain






27. 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






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






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


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






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






32. 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






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






34. 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






35. 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






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. 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.






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






39. 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






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






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






42. 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






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






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






45. Compound internal rate of return.






46. The internal rate of return on an investment.






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






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






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






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