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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. 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






2. 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






3. 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.






4. 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.






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






6. 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






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






8. The internal rate of return on an investment.






9. 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






10. 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.






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






12. 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.






13. 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) ...






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. 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.






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






17. Compound internal rate of return.






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






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






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






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. 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






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






24. How you get out






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






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






27. No double tax - Limited number of investors






28. 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






29. 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






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






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






32. The way you buy stock






33. 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






34. 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






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






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






37. Term sheet for equity offering






38. 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.






39. 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.).






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






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






42. 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.






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






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






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






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






47. How you get to vote






48. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






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






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