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






2. 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.






3. 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.






4. 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






5. 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.






6. 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






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






8. The rate at which a company expends net cash over a certain period - usually a month.






9. 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






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






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






12. 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






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






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






15. 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






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






17. 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.






18. 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






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






20. 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






21. 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

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






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






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






25. 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.






26. 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






27. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






28. 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






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






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






31. Cannot get other outside investors-No Shop






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






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






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






35. 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.).






36. 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






37. 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.






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






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






40. 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.






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






42. 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.






43. 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






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






45. How you get out






46. How much the company is worth before an investment






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






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






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






50. 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