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






2. 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






3. 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.






4. 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.






5. 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






6. 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






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






8. Selling an interest in your business to an outside party to raise money.






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






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






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






12. 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






13. 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






14. 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






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






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






17. 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






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. 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






20. 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.






21. 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






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






23. 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






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






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






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






27. 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.






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






29. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






30. No double tax - Limited number of investors






31. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






32. 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 -






33. 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






34. 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.






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






36. 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.






37. 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






38. Compound internal rate of return.






39. 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






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






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






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






43. 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






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






45. 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.






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






47. The way you buy stock






48. 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.).






49. 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.






50. 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.







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