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






2. Term sheet for equity offering






3. 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.






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






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






6. 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.






7. 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






8. 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.






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






10. 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






11. 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.






12. The way you buy stock






13. 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






14. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot






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






16. How much the company is worth before an investment






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






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






19. 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.






20. 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






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






22. Compound internal rate of return.






23. 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.






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






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






26. 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 -






27. 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






28. Cannot get other outside investors-No Shop






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






30. 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






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






32. 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






33. 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.






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






35. 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






36. 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






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






38. 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.






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






40. 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.






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






42. 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.






43. An IPO that has met certain






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






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






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






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






48. 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






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






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







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