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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. Don't talk to the market about the company






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






3. 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.






4. 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






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






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






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






8. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






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






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






11. 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






12. 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.






13. 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.






14. 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.






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






16. 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






17. 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






18. 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






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






20. 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






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






22. 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.






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






24. 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.






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






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






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






28. 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.






29. How you get to vote






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






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






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






33. 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.






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






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






36. 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.






37. The maximum amount of cash that a partner is required to contribute under the terms






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






39. 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






40. 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.






41. The way you buy stock






42. Cannot get other outside investors-No Shop






43. No double tax - Limited number of investors






44. How much the company is worth before an investment






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






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






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






48. 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






49. 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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50. 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