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






2. 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.






3. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






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






5. 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






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. How much the company is worth before an investment






8. 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.






9. 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






10. 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






11. 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.






12. The company or entity into which a fund invests directly.






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






14. 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.






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






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






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






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






19. 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






20. The internal rate of return on an investment.






21. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






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






23. 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






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






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






26. 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






27. 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.






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






29. 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






30. 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






31. 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.






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






33. 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.).






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






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. 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






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






38. 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.






39. 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






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






41. 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






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






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






44. 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






45. 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






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






47. The residual ownership in a company like a corporation or LLC 51%=control






48. 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






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






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