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






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






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






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






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






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






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






9. 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.






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






11. 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






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






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






14. Cannot get other outside investors-No Shop






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






16. 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






17. 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






18. 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.






19. 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






20. 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






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






22. 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.






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






24. 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.






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






26. 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.






27. 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






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






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






30. The internal rate of return on an investment.






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






32. 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.






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






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






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






36. 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.






37. 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






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






39. 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






40. Money that business owners must pay back with interest. There are myriad types of these - from simple commercial loans to bridge/swing loans in which a lender makes a short-term loan in anticipation of equity financing at a later stage in the develo






41. 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.






42. 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






43. 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






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






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






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






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






48. The method by which an investor will realize an investment.






49. 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






50. 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.