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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. 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






2. 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






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






4. 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.






5. 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






6. Cannot get other outside investors-No Shop






7. 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.






8. 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.






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






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






11. 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






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






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






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






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






16. 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.






17. The total value of the company immediately prior to the latest round of financing






18. 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.






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






20. 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.






21. An IPO that has met certain






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






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






24. 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






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






26. 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.






27. 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






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






29. 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






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






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






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






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






34. 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






35. 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






36. 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.






37. 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.






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






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






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






41. 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.






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






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






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






45. 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






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






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






48. No double tax - Limited number of investors






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






50. 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