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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. 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






2. 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






3. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






4. 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






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






6. 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.






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






8. 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






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






10. 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






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






12. 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.






13. 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






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






15. Term sheet for equity offering






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






17. 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






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






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






20. The internal rate of return on an investment.






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






22. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






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






24. How you get out






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






26. Compound internal rate of return.






27. 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.






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






29. 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.






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






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






33. 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






34. How much the company is worth before an investment






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






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






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






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






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






40. 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






41. The way you buy stock






42. 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.






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






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. 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






46. 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.






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






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






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






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