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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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






3. 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






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 company or entity into which a fund invests directly.






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






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






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






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






10. 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






11. 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 -






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






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






14. 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.






15. 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.






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. Cannot get other outside investors-No Shop






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






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






20. 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.






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






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






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






24. 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






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






26. 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.






27. 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






28. 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.






29. Document between general and limited partnership of each fund spells out details of the partnership.






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






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






32. 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






33. 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.






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






35. 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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36. 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.






37. 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.






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






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






40. 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






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






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






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






44. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.






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. The internal rate of return on an investment.






47. 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.






48. 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.






49. 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.






50. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






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