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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 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






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






4. 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.






5. 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.






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






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






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






10. 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.






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






12. How you get out






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






14. 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.






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






16. No double tax - Limited number of investors






17. 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.






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






19. 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






20. This refers to obtaining capital from investors or venture capital sources.






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






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






23. 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.






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






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






26. 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 -






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






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






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






30. 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






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






32. 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.).






33. 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






34. 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.






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






36. 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






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






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






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






40. 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






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






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






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






44. 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






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






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






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






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






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






50. The way you buy stock