Finance And Accounting

Question: What is a sweeper clause?
A
It is a clause that requires that the books of the company be kept clean and free of fraud.

B
It is a clause that requires the attendance of three management personnel at all meetings.

C
It is a clause that allows the venture capitalist to make requests for financial information from the company from time to time.

D
It is a clause that allows the venture capitalist not to attend meetings.

Note: Not available
1. Report
Question: When investigating the target market of the potential investment, what will the venture capitalists focus on specifically?
A
The pricing of the product

B
The Intellectual Property and any competitors with similar IP

C
The customer base, the competition, and the opportunity in the market space

D
Location of competition

Note: Not available
1. Report
Question: What do veto rights allow the venture capitalist to do?
A
Call board meetings at any point

B
Require liquidation within 30 days

C
Overturn decisions made by the company directors

D
Fire the management

Note: Not available
1. Report
Question: What are the "conversion rights", typically stated on a term sheet?
A
They are terms that allow a venture capitalist to sell off their stock at any point.

B
They are terms that stipulate that the venture capitalists can convert their preferred shares into common shares which will be more easily liquidated.

C
They are terms that allow the target company to surrender more equity to the venture capitalist if the venture is growing quickly.

D
They are terms that prevent anyone from selling stock for the first three years.

Note: Not available
1. Report
Question: What is meant by the right to "observer rights"?
A
The venture capitalist doesn't have to come to the board meetings

B
The venture capitalist can bring in an observer, who can not vote, to the board meeting

C
The company is only allowed to watch board meetings, and not to participate

D
The company management is required to be present at all board meetings

Note: Not available
1. Report
Question: What purpose do milestones serve in the term sheet?
A
They protect the target company in case they don't perform well.

B
They prevent outsiders from investing until specific goals are met.

C
They force the management to make decisions they would not want to make otherwise.

D
They stipulate the goals the target company has to meet in order to receive subsequent amounts of funding.

Note: Not available
1. Report
Question: What is the main reason why a venture capitalist does its own evaluation of a target company's projected financials?
A
Due to their lack of trust in the target company

B
To check that assumptions are reasonable and the model covers all aspects of the company

C
To see if there's potential for even more revenue

D
To spot check for formula errors

Note: Not available
1. Report
Question: How often do venture capital firms change the investments within their portfolios, on an average?
A
Often, several times a year

B
Annually

C
Every three to five years

D
Almost never

Note: Not available
1. Report
Question: What role do the investors play in a venture capital firm?
A
That of investment screeners

B
That of managing directors

C
That of advisors

D
That of due diligence experts

Note: Not available
1. Report
Question: What is the importance of the intellectual property (IP) which venture capitalists focus heavily on?
A
Companies with no IP will never succeed

B
Companies who have IP may be competing against firms with similar IP

C
Venture capitalists want to make sure the company is not at risk of being sued over the IP

D
IP can be a key deciding factor, as the target company's success or failure may hinge on the IP they own

Note: Not available
1. Report

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Question: What is a sweeper clause?

Question: When investigating the target market of the potential investment, what will the venture capitalists focus on specifically?

Question: What do veto rights allow the venture capitalist to do?

Question: What are the "conversion rights", typically stated on a term sheet?

Question: What is meant by the right to "observer rights"?

Question: What purpose do milestones serve in the term sheet?

Question: What is the main reason why a venture capitalist does its own evaluation of a target company's projected financials?

Question: How often do venture capital firms change the investments within their portfolios, on an average?

Question: What role do the investors play in a venture capital firm?

Question: What is the importance of the intellectual property (IP) which venture capitalists focus heavily on?