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






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






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






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






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






6. 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.






7. 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.






8. The internal rate of return on an investment.






9. No double tax - Limited number of investors






10. 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






11. 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






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






13. 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.






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






15. 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.






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






17. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally






18. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






19. 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






20. 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






21. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






22. 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






23. 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






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






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






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






27. The way you buy stock






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






29. 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






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






31. 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.






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






34. 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






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






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






38. 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






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






40. 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






41. 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.






42. 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.






43. 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






44. 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.






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






46. How you get out






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






48. 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






49. 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






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