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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. 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






2. How much the company is worth before an investment






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






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






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






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






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






8. 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






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. How you get to vote






11. 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






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. 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.






14. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






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






16. 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






17. 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.






18. 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






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 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






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






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






23. How you get out






24. 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.






25. 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.






26. The method by which an investor will realize an investment.






27. 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






28. 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






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






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






31. The internal rate of return on an investment.






32. 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






33. 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.






34. 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






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






36. 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.






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






38. 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






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






40. Cannot get other outside investors-No Shop






41. The maximum amount of cash that a partner is required to contribute under the terms






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






43. 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






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






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






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






47. 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.






48. 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






49. 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.






50. 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