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






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






3. No double tax - Limited number of investors






4. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






5. 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.






6. Term sheet for equity offering






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






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






9. 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 -






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






11. 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






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






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






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






15. 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






16. 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






17. 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






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






19. Cannot get other outside investors-No Shop






20. An IPO that has met certain






21. 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






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






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






24. Date the LP's subscription is effective and they become partner






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






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






27. 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.).






28. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






29. How much the company is worth before an investment






30. 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.






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






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






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






34. 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






35. 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






36. 'I will buy stock at price we negotiate'






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






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






39. 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.






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. 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






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






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






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






45. 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.






46. 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.






47. 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.






48. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






49. 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






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







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