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






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






3. 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






4. 'I will buy stock at price we negotiate'






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






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






7. 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






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






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






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






11. 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






12. 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.






13. 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






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






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






16. 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.






17. 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






18. 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 -






19. 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.






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






21. Term sheet for equity offering






22. 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






23. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






24. 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






25. 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.






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






27. Document between general and limited partnership of each fund spells out details of the partnership.






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






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






30. 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


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






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






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






34. 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






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






36. 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






37. 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.






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






39. Compound internal rate of return.






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






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






42. A type of equity ownership in a corporation - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights.






43. 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) ...






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






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






46. 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






47. 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






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






49. 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






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