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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. How much the company is worth before an investment






2. 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.






3. 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






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






5. 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






6. 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






7. The internal rate of return on an investment.






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






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






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






11. 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






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






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.






14. 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






15. 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






16. 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.






17. 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






18. 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






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






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






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






22. 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.






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






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






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






26. 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






27. 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






28. 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.






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






30. Term sheet for equity offering






31. The way you buy stock






32. 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 -






33. 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






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






35. 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






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






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






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






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






40. 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.






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






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






43. How you get to vote






44. 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






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






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






47. 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.






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






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