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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. How much the company is worth before an investment






2. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






3. 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






4. 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






5. 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






6. No double tax - Limited number of investors






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






8. The internal rate of return on an investment.






9. 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.






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






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






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






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






14. 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.






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






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






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






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






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






20. 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.






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






22. 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.






23. 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.






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






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






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






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






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






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






30. 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






31. 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.






32. 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) ...






33. 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.






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






35. 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






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






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






38. 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.






39. Term sheet for equity offering






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






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






42. 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






43. 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






44. 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.






45. 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






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






47. Cannot get other outside investors-No Shop






48. 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.






49. 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






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