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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 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






2. Term sheet for equity offering






3. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






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






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






6. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






7. 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






8. 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.






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






10. 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) ...






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






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






13. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






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






16. 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.






17. 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






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






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






20. 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.






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






22. 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.






23. 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.






24. Cannot get other outside investors-No Shop






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






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






27. 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






28. 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






29. 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






30. 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.






31. 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






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






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






34. Date the LP's subscription is effective and they become partner






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






36. Pre-money valuation plus the amount invested in the latest round






37. An IPO that has met certain






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. The total value of the company immediately prior to the latest round of financing






40. 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






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






42. 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






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






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






45. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






46. 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






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






48. 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.






49. 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






50. Letter of intent summarizing the key legal and financial terms