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






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






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






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






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






6. 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






7. 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






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






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. 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






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






12. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






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






14. 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.






15. 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






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






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






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






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






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






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






22. 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






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






24. 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






25. 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






26. 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






27. 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) ...






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






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






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






31. 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






32. 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.






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. 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. Document between general and limited partnership of each fund spells out details of the partnership.






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






37. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






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






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






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






41. 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






42. 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.).






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






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






45. Compound internal rate of return.






46. 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






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






48. 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






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






50. 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.