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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. 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






2. 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.).






3. 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.






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






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






6. 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.






7. The internal rate of return on an investment.






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






9. 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






10. 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.






11. 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






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






13. 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






14. 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






15. 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






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






17. 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






18. 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


19. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






21. Compound internal rate of return.






22. 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.






23. 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






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






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






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






27. 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.






28. 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.






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






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






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






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






33. 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






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






35. No double tax - Limited number of investors






36. 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






37. 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.






38. 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






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






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






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






42. The way you buy stock






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






44. 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






45. 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






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






47. 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.






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






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






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