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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 reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






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






3. 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.






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






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






6. 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






7. 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






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






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






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






11. 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






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






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






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






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






16. The internal rate of return on an investment.






17. 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






18. 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.






19. 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






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






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






22. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation






23. How much the company is worth before an investment






24. 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) ...






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






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






27. Don't talk to the market about the company






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






29. Compound internal rate of return.






30. 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






31. Cannot get other outside investors-No Shop






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






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






34. 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






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






36. 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






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






38. 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.






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






40. 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






41. 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






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. 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






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






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






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 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.






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






49. 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






50. An IPO that has met certain