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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. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.






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






3. 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






4. 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.






5. 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






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






7. 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






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






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






10. 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






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






12. 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






13. How much the company is worth before an investment






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






15. 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.






16. 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 -






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






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






19. 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.






20. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






21. 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






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






23. 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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24. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.






25. 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






26. 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.






27. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






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






29. 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






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






31. 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






32. 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






33. 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






34. 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.






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






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






37. 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.






38. 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






39. 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






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






41. An IPO that has met certain






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






43. 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.






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






45. 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






46. 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.






47. 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






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






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






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