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






2. 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.






3. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






4. No double tax - Limited number of investors






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






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






7. 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






8. 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.






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






10. Compound internal rate of return.






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






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






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






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






15. 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.






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






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






18. 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






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






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






22. 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.






23. 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






24. 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.






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






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






27. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






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






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






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. 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.






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






33. 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






34. 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






35. Term sheet for equity offering






36. 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.






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






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






39. 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






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






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






42. How you get to vote






43. 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) ...






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






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






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






47. 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.






48. 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.).






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. 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