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Venture Capital
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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. 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.
IRR
Outstanding Stock
Term Sheet
return on investment (ROI)
2. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
buyout
Stock Price Agreement
due diligence
Dividends
3. 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.).
institutional investors
Liquidity Event
Seed Money
Private Equity
4. 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.
Bridge Financing
Cash-out election
syndication
due diligence
5. 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.
Initial Public Offering
Capital Call 'Drawdown'
exit
follow-on
6. 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
Restricted Shares
Qualified IPO
Liquidation
term sheet
7. 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.
Equity
Deal Structure
Market Capitalization
Post-money
8. 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
benchmarks
Capital Commitment
Limited Partner
return on investment (ROI)
9. 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
Limited Partnership Agreement
Lead Investor
Stock Price Agreement
return on investment (ROI)
10. The method by which an investor will realize an investment.
exit route
leverage buy-out(LBO)
acquisition
liquidation
11. 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
small business investment companies (SBIC)
Term Sheet
Elevator Pitch
leverage buy-out(LBO)
12. Selling an interest in your business to an outside party to raise money.
Private Equity
equity financing
Liquidity Event
limited partnerships
13. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Restricted Shares
management buy-in (MBI)
Private Equity
raising capital
14. Document between general and limited partnership of each fund spells out details of the partnership.
due diligence
Limited Partnership Agreement
Adjusted Book Value
Limited Partner
15. The equity ownership in a corporation. Also has basic voting rights
Conversion Rights
Common Stock
Elevator Pitch
private equity
16. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Common Equity
Elevator Pitch
lead investor
venture capital
17. 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
bridge loans
Capital Call 'Drawdown'
benchmarks
turnaround
18. 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
Corporation (Limited liability and taxation)
Dividends
corporate venturing
term sheet
19. 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.
management buy-out (MBO)
Preferred Stock
closing
secondary purchase
20. The residual ownership in a company like a corporation or LLC 51%=control
Business Summary
Equity
seed capital
Corporation (Limited liability and taxation)
21. A study of the background and financial reliability of the company - management team and industry.
liquidation
Due Diligence
Post-Money Valuation
Bootstrapping
22. 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
Bridge Financing
Capitalization Table
capital gain
series a preferred stock
23. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
PPM
Business Plan
Term Sheet
24. 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
IPO (Initial Public Offering)
debt financing
Liquidation
liquidation
25. How much the company is worth before an investment
Senior Stock
small business investment companies (SBIC)
Pre-Money Valuation
buyout
26. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Book Value
Stock Price Agreement
Equity
closing
27. 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
seed capital
Bridge Financing
Pre-Money Valuation
private investment in public equities (PIPE)
28. How you get to vote
Stock Price Agreement
Pre-Money Valuation
Voting Rights
leverage buy-out(LBO)
29. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.
IPO (Initial Public Offering)
Preferred Stock
due diligence
Limited Partner
30. The maximum amount of cash that a partner is required to contribute under the terms
secondary purchase
Preferred Stock
Preferred Stock
Capital Commitment
31. Assets are subject to double taxation - Unlimited number of investors
C Corporation
seed capital
Preferred Stock
limited partnerships
32. 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
Dividends
Term Sheet
Venture Capitalist
Warrants
33. The practice of a large company taking a minority equity position in a smaller company in a related field.
General Partner (GP)
corporate venturing
buyout
Pre-Money Valuation
34. The rate at which a company expends net cash over a certain period - usually a month.
S Corporation
Lead Investor
follow-on
Burn Rate
35. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
turnaround
secondary public offering
Term Sheet
Warrants
36. 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.
acquisition
Private Equity
Pre-Money Valuation
recapitalization
37. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Capital Commitment
Angel Financing
Term Sheet
turnaround
38. This refers to obtaining capital from investors or venture capital sources.
IPO(initial public offerings)
raising capital
syndication
Market Capitalization
39. 'I will buy stock at price we negotiate'
corporate venturing
Stock Price Agreement
portfolio compaay
IPO (Initial Public Offering)
40. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
term sheet
fund of funds
leverage buy-out(LBO)
Stock Price Agreement
41. This refers to a synopsis of the key points of a business plan.
executive summary
benchmarks
Lead Investor
Angel Financing
42. A security with limits on its transferability. Usually issued in connection with a private placement
management buy-out (MBO)
Membership Interest
Restricted Stock
Book Value
43. 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
PPM
Adjusted Book Value
Preferred Stock
series a preferred stock
44. 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
Business Plan
due diligence
IPO(initial public offerings)
Preferred Stock
45. How you get out
Preferred Stock
Private Equity
follow-on
Liquidation Preference
46. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
Market Capitalization
Capital
Anti-Dilution Protections
47. 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
Angel Financing
IPO(initial public offerings)
Liquidation Preference
buyout
48. 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.
Preferred Stock
buyout
liquidation
mezzanine financing
49. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
IPO(initial public offerings)
buyout
No Shop/Confidentiality
Conversion Rights
50. 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) ...
Liquidation
Private Equity
Dividends
Initial Public Offering
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