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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. 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.






2. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






3. 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






4. 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






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






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






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






8. 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


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






10. 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.






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






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






14. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






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






16. 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) ...






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






18. 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.






19. 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.






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






21. 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.






22. 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






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






24. 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






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






26. Cannot get other outside investors-No Shop






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






28. 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.






29. 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






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






31. Compound internal rate of return.






32. The way you buy stock






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






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






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






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






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






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






39. 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






40. Assets are subject to double taxation - Unlimited number of investors






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






42. 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.






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






44. 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






45. How you get to vote






46. How much the company is worth before an investment






47. 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.






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






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






50. 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.).