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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 total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public






2. Cannot get other outside investors-No Shop






3. Term sheet for equity offering






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






5. Compound internal rate of return.






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






7. 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.






8. 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.






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






10. 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






11. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






12. 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.






13. 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






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






15. 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






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






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






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






19. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






20. 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.






21. How much the company is worth before an investment






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






23. 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.






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






25. 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.






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






27. 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






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






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






30. 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.






31. 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.






32. 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.






33. 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






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






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






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






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






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






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






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






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






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






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






44. 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






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






46. 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.






47. How you get out






48. 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.).






49. No double tax - Limited number of investors






50. 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.