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Venture Capital

Subject : industries
  • 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. 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.

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

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. 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

5. 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

6. 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.

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

8. 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.

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

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

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

12. 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.

13. The equity ownership in a corporation. Also has basic voting rights

14. This refers to obtaining capital from investors or venture capital sources.

15. 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) ...

16. 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.

17. Compound internal rate of return.

18. 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.

19. 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

20. 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

21. 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

22. 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

23. 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.

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

25. 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

26. How you get to vote

27. The way you buy stock

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

29. 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

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

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

32. 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

33. No double tax - Limited number of investors

34. 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

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

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

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

38. Term sheet for equity offering

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

41. 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

42. 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

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

44. 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

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

46. This refers to a synopsis of the key points of a business plan.

47. 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

48. An IPO that has met certain

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

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