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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. Letter of intent summarizing the key legal and financial terms






2. 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.






3. 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






4. How much the company is worth before an investment






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






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






7. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






8. Term sheet for equity offering






9. 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






10. 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






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






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






13. 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






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






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






16. 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.






17. 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.






18. 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






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






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. Investments by a private equity fund in a publicly traded company - usually at a discount.






23. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






25. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






26. 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






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






28. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






29. The internal rate of return on an investment.






30. 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






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






32. 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






33. 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.






34. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.






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






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






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






38. 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






39. 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






40. 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.






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






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






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






44. The way you buy stock






45. 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






46. 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






47. 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.






48. 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.






49. 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






50. 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