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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. 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) ...






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






3. 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






4. The rate at which a company expends net cash over a certain period - usually a month.






5. 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






6. 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






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






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






9. 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.






10. 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.






11. The internal rate of return on an investment.






12. Term sheet for equity offering






13. 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






14. 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






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






16. 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






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






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






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






20. The residual ownership in a company like a corporation or LLC 51%=control






21. 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






22. 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






23. Cannot get other outside investors-No Shop






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






25. 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






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






27. 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 -






28. 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.






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






30. 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.






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






32. 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.






33. 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






34. 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






35. 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






36. The value at which an asset is carried on a balance sheet (the cost of the item)






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






38. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






39. 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






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






41. How you get out






42. 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






43. Compound internal rate of return.






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






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






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






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






48. The way you buy stock






49. 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.






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






Can you answer 50 questions in 15 minutes?



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