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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 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.






2. 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






3. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






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






5. 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.






6. 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






7. How you get to vote






8. 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






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






10. 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






11. 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) ...






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






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






14. 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






15. Compound internal rate of return.






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






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






18. 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.






19. 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


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






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. 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






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






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






25. 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.






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






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






28. 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 -






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






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






31. The internal rate of return on an investment.






32. The practice of a large company taking a minority equity position in a smaller company in a related field.






33. 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






34. 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






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






36. 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.






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






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






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






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






41. 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






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






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






44. 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.






45. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






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






49. No double tax - Limited number of investors






50. 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