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






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






3. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






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






5. 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.






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






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






8. 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.






9. 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.






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






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






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






13. 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






14. The way you buy stock






15. 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.






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






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






18. 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






19. How much the company is worth before an investment






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






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






22. 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






23. 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.






24. 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






25. 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






26. Cannot get other outside investors-No Shop






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






28. 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






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






30. An IPO that has met certain






31. 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.).






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






33. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






34. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






35. 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






36. 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.






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






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






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






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






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






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






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






44. 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






45. 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






46. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






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






48. The internal rate of return on an investment.






49. 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






50. 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