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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. 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.






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. 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.






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






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






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






7. 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






8. 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






9. 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






10. 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






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






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






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






14. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






15. How much the company is worth before an investment






16. 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






17. 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


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






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






20. 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






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






22. 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






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






24. 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.).






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






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






27. An IPO that has met certain






28. Compound internal rate of return.






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






30. 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






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






32. 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






33. 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.






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






35. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






36. 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






37. No double tax - Limited number of investors






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






39. 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






40. 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.






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






42. 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






43. The internal rate of return on an investment.






44. 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






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






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






47. The way you buy stock






48. 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.






49. 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






50. 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.