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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. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






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






3. 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.).






4. Cannot get other outside investors-No Shop






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






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






7. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






8. 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






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






10. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






11. Compound internal rate of return.






12. 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






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






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






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






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






17. 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






18. 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.






19. How much the company is worth before an investment






20. 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.






21. 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.






22. 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






23. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






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






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






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






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






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. 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.






30. The internal rate of return on an investment.






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






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






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






34. 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






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






36. 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






37. How you get to vote






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






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






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






41. 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.






42. 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






43. 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






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. 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






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






47. 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






48. 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






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






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