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19 Cards in this Set
- Front
- Back
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Main characteristics of a VC
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(1) Financial intermediary
(2) Invests only in private companies (3) Takes an active role in monitoring the companies in its portfolio (4) Primary goal is to maximize its financial return by exiting investments through sale on IPO (5) Invests to fund the internal growth of companies |
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Limited Partner
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Provides capital to a general partner, who then invests the money
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Angel Investors
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A wealthy individual that invests in young growth companies; uses his own money unlike VCs that use LPs' money
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Private Equity
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All investments that cannot be resold in public markets; a class of investments managed by private equity firms which make investments in VC, leveraged buyouts, mezzanine, or distress
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Strategic Investing
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Investing with goals beyond the maximization of financial returns
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Corporate Venture Capital
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VC investment by corporations; often mixes financial and strategic goals
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Early Stage
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Provides financing to companies completing development where products are mostly in testing or pilot production
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Mid Stage
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Also known as the expansionary stage; involves applying working capital to the initial expansion of a company; the company is now producing, shipping, and has growing accounts receivables and inventories
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Late Stage
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Capital in this stage is provided for companies that have reached a fairly stable growth rate; not growing as fast as in expansionary stage
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Hedge Funds
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A type of alternative investment that focuses mainly on publicly traded securities; generally have shorter lockup provisions than private equity funds; generally shorter term investing- trading in public securities of distressed companies with the intention of making a trading profit by quickly reselling
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Alternative Investments
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Consists of Private Equity and Hedge Funds
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Mezzaine
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Two meanings: the middle of capital structure or the middle of the company's development
Within VC and PE: late to very late stage VC |
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Growth Capital Investing
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Capital used in VC beyond the early stage
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Leveraged Buyout
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When a company is purchased using a significant amount of debt
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Distressed Investing
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Investing in companies that have a significant risk of going out of business (= Special Situations)
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VC Activities
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(1) Investing
(2) Monitoring (3) Exiting |
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Term Sheet
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Preliminary offer that outlines the proposed valuation, type of security, and control rights of investor
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Carried Interest
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Fund profits paid to the general partner
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Stages of Growth
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(1) Seed/Start-up
(2) Early Stage (3) Expansion (Mid) (4) Later Stage |
