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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






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






3. 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 -






4. 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.






5. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






6. 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.






7. 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






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






9. 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






10. 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.






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






12. 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






13. 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






14. 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






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






16. 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.






17. 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






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






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






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






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






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






23. 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






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






25. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






26. 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






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






28. 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






29. 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.






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






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






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






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






34. The way you buy stock






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






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






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






38. 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.).






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






40. An IPO that has met certain






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






42. The residual ownership in a company like a corporation or LLC 51%=control






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






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






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






46. An investment vehicle designed to invest in a diversified group of investment funds.






47. 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.






48. 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






49. 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.






50. 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