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






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






3. 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






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






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






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






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






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






10. The internal rate of return on an investment.






11. How you get to vote






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






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






14. 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






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






16. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.






17. 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.






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






19. 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.






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






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






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






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






24. 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






25. 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






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






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






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






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






30. 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






31. 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.






32. 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






33. 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.






34. 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






35. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






36. 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






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






38. How you get out






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






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






41. 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






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






43. 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






44. 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






45. 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.






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






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. 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.).






49. 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






50. How much the company is worth before an investment






Can you answer 50 questions in 15 minutes?



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