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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 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






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






3. 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.






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






5. 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






6. 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






7. 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






8. 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






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






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






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






12. 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






13. 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.






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






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






16. 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) ...






17. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






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






19. 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.






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






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






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






24. The way you buy stock






25. 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






26. How you get to vote






27. 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






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






29. Term sheet for equity offering






30. 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






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






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






33. 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.






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






35. Compound internal rate of return.






36. How you get out






37. 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






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






39. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






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






41. 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






42. 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.






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






44. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






45. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






46. 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






47. 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






48. 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






49. 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.






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