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Venture Capital
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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. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
minority enterprise small business investment companies (MESBICS)
Closing
Warrants
2. The practice of a large company taking a minority equity position in a smaller company in a related field.
angel investors
Book Value
corporate venturing
Restricted Shares
3. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Bridge Financing
equity offerings
Anti-Dilution Protections
Preferred Stock
4. No double tax - Limited number of investors
Preferred Stock
Internal Rate of Return
S Corporation
Limited Partnership Agreement
5. The method by which an investor will realize an investment.
Business Plan
Closing
Post-money
exit route
6. 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
private equity
Common Equity
Series A Preferred Stock
Business Plan
7. How you get out
Venture Capital Financing
Pre-Money Valuation
Liquidation Preference
Senior Stock
8. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
secondary public offering
management buy-out (MBO)
management buy-in (MBI)
Term Sheet
9. 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.
S Corporation
Venture Capitalist
going private
turnaround
10. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Capitalization Table
Subordinated Debt
General Partner (GP)
Adjusted Book Value
11. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
turnaround
return on investment (ROI)
closing
Market Capitalization
12. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
IRR
exit
Elevator Pitch
fund of funds
13. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
lead investor
Series A Preferred Stock
mezzanine financing
Outstanding Stock
14. 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
Common Equity
C Corporation
seed capital
Internal Rate of Return
15. Term sheet for equity offering
Venture Capital Financing
Term Sheet
Angel Financing
Cash-out election
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
Membership Interest
Pre-Money Valuation
series a preferred stock
capital under management
17. Don't talk to the market about the company
Confidentiality
Corporation (Limited liability and taxation)
benchmarks
management buy-out (MBO)
18. 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.
exit
Outstanding Stock
term sheet
small business investment companies (SBIC)
19. 'I will buy stock at price we negotiate'
benchmarks
Pre-Money Valuation
Stock Price Agreement
limited partnerships
20. Date the LP's subscription is effective and they become partner
minority enterprise small business investment companies (MESBICS)
Closing
Business Plan
Confidentiality
21. 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.
capital under management
Due Diligence
exit route
Bootstrapping
22. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Restricted Shares
Deal Structure
lead investor
Senior Stock
23. 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) ...
corporate venturing
Initial Public Offering
syndication
Restricted Shares
24. The equity ownership in a corporation. Also has basic voting rights
Burn Rate
Venture Capital Financing
Common Stock
Post-Money Valuation
25. 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
exit route
Post-money
Post-Money Valuation
Internal Rate of Return
26. 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
Outstanding Stock
Confidentiality
Market Capitalization
equity financing
27. The internal rate of return on an investment.
angel investors
Adjusted Book Value
Conversion Rights
return on investment (ROI)
28. How you get to vote
Private Equity
S Corporation
Subordinated Debt
Voting Rights
29. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
private investment in public equities (PIPE)
Conversion Rights
angel investors
30. 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.
secondary public offering
Pre-Money Valuation
Senior Stock
General Partner (GP)
31. How much the company is worth before an investment
Pre-Money Valuation
S Corporation
Capital Call 'Drawdown'
Limited Partner
32. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
management buy-out (MBO)
term sheet
Term Sheet
33. 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
IPO (Initial Public Offering)
Voting Rights
syndication
IRR
34. 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
Equity
Capitalization Table
Business Plan
closing
35. 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
Seed Money
equity financing
Lead Investor
Qualified IPO
36. The value at which an asset is carried on a balance sheet (the cost of the item)
leverage buy-out(LBO)
Adjusted Book Value
Book Value
acquisition
37. The residual ownership in a company like a corporation or LLC 51%=control
Equity
Senior Stock
liquidation
management buy-in (MBI)
38. 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
Pre-Money Valuation
Term Sheet
benchmarks
seed capital
39. This refers to obtaining capital from investors or venture capital sources.
IPO (Initial Public Offering)
raising capital
management buy-in (MBI)
Internal Rate of Return
40. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
corporate venturing
Subordinated Debt
Angel Financing
benchmarks
41. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -
limited partnerships
private equity
Capital Commitment
capital gain
42. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
angel investors
Post-Money Valuation
Due Diligence
Subordinated Debt
43. The way you buy stock
Cash-out election
term sheet
follow-on
PPM
44. An investment vehicle designed to invest in a diversified group of investment funds.
Series A Preferred Stock
IRR
fund of funds
Capital
45. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
capital gain
leverage buy-out(LBO)
Cash-out election
C Corporation
46. Selling an interest in your business to an outside party to raise money.
Limited Partnership Agreement
equity financing
buyout
Subordinated Debt
47. 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
S Corporation
capital under management
Preferred Stock
General Partner (GP)
48. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Common Equity
term sheet
Book Value
Liquidity Event
49. 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
Qualified IPO
going private
term sheet
General Partner (GP)
50. 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
follow-on
Restricted Stock
Private Equity
secondary public offering
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