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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. 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






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






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






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






5. Compound internal rate of return.






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. 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.






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






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






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






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






12. 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.






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






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






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






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






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






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






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






20. 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) ...






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






22. 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






23. 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






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






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






26. How much the company is worth before an investment






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






28. 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






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






30. 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






31. A request from the GPs requiring each limited partner to deliver a portion of their capital commitment. Usually specified as a percentage of the capital commitment


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. Term sheet for equity offering






34. 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.






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. 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






37. 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






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






39. 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






40. 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






41. No double tax - Limited number of investors






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






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






44. 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.






45. 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.






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






47. 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.






48. 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






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






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