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






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






3. 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






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 investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






6. 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






7. The internal rate of return on an investment.






8. Selling an interest in your business to an outside party to raise money.






9. 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






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






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






12. 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






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






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






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






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






17. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






19. 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.






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






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






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






23. 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






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






25. 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






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






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






28. 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


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






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






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






32. 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.






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






34. 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






35. 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






36. 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.






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






38. Compound internal rate of return.






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






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






41. Term sheet for equity offering






42. 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






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. 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.).






45. 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






46. 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.






47. 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.






48. The way you buy stock






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






50. Don't talk to the market about the company