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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 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.






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






3. 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






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






6. 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






7. 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






8. 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.






9. 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






10. 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






11. 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






12. Term sheet for equity offering






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






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






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






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






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






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






19. An IPO that has met certain






20. Document between general and limited partnership of each fund spells out details of the partnership.






21. Date the LP's subscription is effective and they become partner






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






23. 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






24. No double tax - Limited number of investors






25. The method by which an investor will realize an investment.






26. 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






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






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






29. 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






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






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






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






33. 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.






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






35. 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






36. 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.






37. Cannot get other outside investors-No Shop






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






39. 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






40. 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






41. 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






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






43. 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.






44. 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.






45. How much the company is worth before an investment






46. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






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






48. 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






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






50. 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