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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 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






2. 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






3. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






4. How you get out






5. 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






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






7. 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.






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






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






10. 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.






11. 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.






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






13. No double tax - Limited number of investors






14. Compound internal rate of return.






15. 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






16. 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.






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






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






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






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






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






22. 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.






23. 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.






24. 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






25. 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.






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






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






28. 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






29. 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






30. 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






31. 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.






32. 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.






33. 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






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






35. An IPO that has met certain






36. 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






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






38. 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.






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






40. Term sheet for equity offering






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. 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.






43. 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.






44. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






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






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






47. 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






48. 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






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






50. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the