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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. 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.






2. 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






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






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






5. 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






6. 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

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7. 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






8. A security with limits on its transferability. Usually issued in connection with a private placement






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






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






13. Compound internal rate of return.






14. 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.






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






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






17. 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






18. 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.






19. 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) ...






20. 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






21. 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






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






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






24. Issue of shares of a company to the public by the company (directly) for the first time.






25. 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.






26. 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.






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. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






29. The way you buy stock






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






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






32. The internal rate of return on an investment.






33. Cannot get other outside investors-No Shop






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






35. 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.






36. 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






37. 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






38. The practice of a large company taking a minority equity position in a smaller company in a related field.






39. 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






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






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






42. 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.






43. 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.






44. 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 -






45. 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.






46. 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






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






48. 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.






49. 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






50. 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