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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 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






2. 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






3. 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






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






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






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






8. 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.






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






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






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






12. Compound internal rate of return.






13. 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.






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. 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






16. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






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






18. 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






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 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.






21. 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.






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






23. 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.






24. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






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






26. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






27. The internal rate of return on an investment.






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






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






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






31. 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 -






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






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






34. 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






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






36. 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






37. 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






38. 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






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






40. 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.






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






42. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






43. 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






44. 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






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






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






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






49. 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






50. 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.).