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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. 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






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






3. 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.






4. 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






5. No double tax - Limited number of investors






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






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






8. 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






9. 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






10. 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.






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






12. 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






13. Compound internal rate of return.






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






15. 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






16. 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.






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






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






19. 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.






20. 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






21. 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






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






23. 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






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






25. 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






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






27. 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






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






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






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






31. How you get to vote






32. 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






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






34. 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






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






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






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






38. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






39. 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.






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






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






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






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






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






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






46. 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.






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






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






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






50. 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