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






2. Letter of intent summarizing the key legal and financial terms






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






4. 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.






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






6. No double tax - Limited number of investors






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






8. Term sheet for equity offering






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






10. 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






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






12. The equity ownership in a corporation. Also has basic voting rights






13. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.






14. 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






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






16. 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






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






18. 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






19. 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.






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






21. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.






22. 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






23. 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






24. 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.






25. 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

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






27. Compound internal rate of return.






28. 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






29. 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






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






31. 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.).






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






33. 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.






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






35. 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






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






37. 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.






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






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






40. 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.






41. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






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






43. 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






44. 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






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






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






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






48. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






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






50. An IPO that has met certain