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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. 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.






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






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






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






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






6. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






7. 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.






8. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






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






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






11. 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






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






13. 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.






14. No double tax - Limited number of investors






15. 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






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. The internal rate of return on an investment.






18. 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






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






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






21. Compound internal rate of return.






22. 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.






23. The way you buy stock






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






25. 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






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






27. 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.






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






29. 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.






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






31. 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






32. 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.






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






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






35. How you get out






36. An investment vehicle designed to invest in a diversified group of investment funds.






37. Term sheet for equity offering






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






39. 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






40. 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.






41. 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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42. 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






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. 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






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






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






47. 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






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






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






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