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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 method by which an investor will realize an investment.






2. 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.






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






4. Term sheet for equity offering






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






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






7. 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.






8. 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






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






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






11. 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.






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






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






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






15. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






16. 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






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






18. 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






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






20. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






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






23. 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) ...






24. 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






25. 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






26. Cannot get other outside investors-No Shop






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






28. 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






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






30. 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.






31. 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.






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






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






34. 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.






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






36. 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






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. No double tax - Limited number of investors






39. 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 -






40. 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






41. 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






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






43. 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.






44. 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.






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






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






47. 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






48. 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






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






50. 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