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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. 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






2. 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






3. 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






4. 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






5. 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.






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






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






8. 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.






9. 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.






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






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






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. 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.






14. 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.






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






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 party that manages a limited partnership and is liable for the debts of the company






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






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






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






21. 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






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






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






24. Cannot get other outside investors-No Shop






25. 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.






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






27. 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.






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






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






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






31. 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






32. 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






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






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






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






36. 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.






37. 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.






38. 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 -






39. 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






40. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






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






43. 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






44. 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.






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






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






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






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






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






50. 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