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






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






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






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






5. 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.).






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






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






8. 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.






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






10. 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






11. 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






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






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






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






16. 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






17. 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






18. 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.






19. 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.






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






21. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






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






23. 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.






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






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






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






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






28. 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.






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






30. 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






31. No double tax - Limited number of investors






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






33. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






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






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






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






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






38. How you get to vote






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






40. Compound internal rate of return.






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






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






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






44. 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.






45. 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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46. 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 -






47. 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.






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






49. 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.






50. 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