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






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






3. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






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






5. 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






6. 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.






7. 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.






8. Compound internal rate of return.






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






10. 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






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






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






13. 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.






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






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






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






17. 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






18. 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






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






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






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






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






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






24. 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






25. 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






26. 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






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






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






29. 'I will buy stock at price we negotiate'






30. The way you buy stock






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






32. 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






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






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






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






36. 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






37. 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






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






39. 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






40. 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.






41. 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


42. 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.






43. 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.






44. Issue of shares of a company to the public by the company (directly) for the first time.






45. 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.






46. 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.






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






48. How you get out






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






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