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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. Date the LP's subscription is effective and they become partner
Closing
capital gain
Stock Price Agreement
Bootstrapping
2. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
institutional investors
IPO (Initial Public Offering)
Subordinated Debt
lead investor
3. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
equity financing
Warrants
portfolio compaay
Book Value
4. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
Capital
seed capital
Closing
5. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Pre-Money Valuation
NDA (Non-disclosure agreement)
Confidentiality
No Shop/Confidentiality
6. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Liquidation Preference
Anti-Dilution Protections
NDA (Non-disclosure agreement)
follow-on
7. Term sheet for equity offering
Term Sheet
venture capital
lead investor
Post-money
8. The rate of return or profit that an investment is expected to earn.
raising capital
management buy-out (MBO)
Venture Capital Financing
Internal Rate of Return
9. 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.
Common Equity
secondary purchase
recapitalization
secondary public offering
10. 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
equity financing
S Corporation
Venture Capital Financing
Seed Money
11. A study of the background and financial reliability of the company - management team and industry.
Warrants
acquisition
debt financing
Due Diligence
12. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Initial Public Offering
NDA (Non-disclosure agreement)
Liquidation
institutional investors
13. The way you buy stock
Capital Call 'Drawdown'
minority enterprise small business investment companies (MESBICS)
PPM
limited partnerships
14. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
General Partner (GP)
Capital
equity offerings
private equity
15. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
leverage buy-out(LBO)
secondary purchase
IPO(initial public offerings)
Common Equity
16. The equity ownership in a corporation. Also has basic voting rights
bridge loans
Preferred Stock
Common Stock
Senior Stock
17. 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
General Partner (GP)
IPO (Initial Public Offering)
Liquidity Event
management buy-in (MBI)
18. 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
No Shop/Confidentiality
exit
Elevator Pitch
Deal Structure
19. 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
Liquidation Preference
buyout
management buy-in (MBI)
recapitalization
20. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
private investment in public equities (PIPE)
capital gain
Limited Partner
Burn Rate
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
seed capital
C Corporation
IPO (Initial Public Offering)
Market Capitalization
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
Cash-out election
Common Stock
Term Sheet
buyout
23. 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
Venture Capital Financing
buyout
benchmarks
going private
24. 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
angel investors
capital under management
Adjusted Book Value
small business investment companies (SBIC)
25. 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.
buyout
turnaround
Corporation (Limited liability and taxation)
liquidation
26. 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.
Venture Capitalist
Preferred Stock
Senior Stock
secondary public offering
27. 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
NDA (Non-disclosure agreement)
Preferred Stock
Capital
raising capital
28. 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
Business Summary
Private Equity
benchmarks
Preferred Stock
29. 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
Burn Rate
Limited Partner
Business Plan
Closing
30. 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.
mezzanine financing
Preferred Stock
debt financing
General Partner (GP)
31. The value at which an asset is carried on a balance sheet (the cost of the item)
term sheet
Book Value
return on investment (ROI)
small business investment companies (SBIC)
32. 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 -
Preferred Stock
limited partnerships
NDA (Non-disclosure agreement)
Restricted Stock
33. 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
raising capital
Venture Capital Financing
Deal Structure
Lead Investor
34. The method by which an investor will realize an investment.
private equity
Equity
exit route
executive summary
35. Don't talk to the market about the company
Confidentiality
Limited Partner
Venture Capital Financing
Post-money
36. Cannot get other outside investors-No Shop
No Shop/Confidentiality
follow-on
Preferred Stock
Common Stock
37. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
seed capital
Preferred Stock
due diligence
exit
38. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
institutional investors
Post-Money Valuation
Senior Stock
39. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
executive summary
limited partnerships
Common Stock
angel investors
40. 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
Liquidity Event
series a preferred stock
IPO (Initial Public Offering)
bridge loans
41. The amount of this available to a management team for venture investments.
Restricted Shares
Capital Call 'Drawdown'
Preferred Stock
capital under management
42. The practice of a large company taking a minority equity position in a smaller company in a related field.
IPO(initial public offerings)
corporate venturing
Elevator Pitch
Pre-money valuation
43. 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
Limited Partner
portfolio compaay
Adjusted Book Value
going private
44. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
debt financing
NDA (Non-disclosure agreement)
Common Equity
series a preferred stock
45. 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.
IRR
portfolio compaay
Preferred Stock
S Corporation
46. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
due diligence
Restricted Stock
Capital Call 'Drawdown'
lock-up period
47. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
No Shop/Confidentiality
closing
Conversion Rights
Limited Partnership Agreement
48. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
Anti-Dilution Protections
portfolio compaay
executive summary
49. 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.
liquidation
secondary purchase
benchmarks
Dividends
50. 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
C Corporation
private equity
Liquidity Event
acquisition
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