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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.
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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. 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.






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






3. 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






4. 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.






5. How much the company is worth before an investment






6. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.






7. 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.






8. 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






9. 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






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






11. 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






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






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






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






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






16. 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






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






18. How you get out






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






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






21. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






22. 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.






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






24. 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






25. 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






26. 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.






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






29. 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






30. 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






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






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






33. 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.






34. 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


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






36. 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






37. 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






38. 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






39. 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.






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






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






42. An IPO that has met certain






43. 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






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






45. No double tax - Limited number of investors






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






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






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






49. Term sheet for equity offering






50. 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