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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. 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






2. 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






3. 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






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






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






6. 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) ...






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






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






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






10. 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






11. 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.






12. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






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






14. 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






15. 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






16. 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






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






18. 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.






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






20. 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.).






21. 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






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






23. The company or entity into which a fund invests directly.






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






25. How much the company is worth before an investment






26. 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






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






28. 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






29. 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.






30. An IPO that has met certain






31. 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.






32. 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






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






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






35. 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






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






37. Term sheet for equity offering






38. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






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






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






41. Compound internal rate of return.






42. 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






43. 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






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






45. 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






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






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






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






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