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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. 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. 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


3. 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






4. 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.






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






6. 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.






7. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






8. 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






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






10. 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.






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






12. 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.






13. 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






14. 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






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






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. An investment vehicle designed to invest in a diversified group of investment funds.






19. How much the company is worth before an investment






20. 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.






21. 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.






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






23. 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.






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






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






26. The way you buy stock






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






28. How you get out






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






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






31. 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






32. 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) ...






33. 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.






34. 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.






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






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






37. An IPO that has met certain






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






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






40. 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.






41. Term sheet for equity offering






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






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






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






45. 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






46. 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






47. No double tax - Limited number of investors






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






49. 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






50. 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