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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 residual ownership in a company like a corporation or LLC 51%=control






2. 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






3. 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.






4. 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.






5. 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 -






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






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






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






9. 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






10. 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






11. How much the company is worth before an investment






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






13. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






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






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






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






17. 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.






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






19. 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.






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






21. The way you buy stock






22. 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.






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






24. The internal rate of return on an investment.






25. 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






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






27. 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.






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






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






30. The rate at which a company expends net cash over a certain period - usually a month.






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






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






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






34. 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






35. 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






36. 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






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






38. How you get out






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






40. No double tax - Limited number of investors






41. 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






42. 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






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






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






45. 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






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






47. 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.






48. It refers mainly to insurance companies - pension funds and investment companies collecting savings and supplying funds to markets - but also to other types of institutional wealth (e.g. endowments funds - foundations etc.).






49. 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






50. 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.