TestReview Flashcards
(21 cards)
first step of VC life cycle
determine fund objectives and policies
last step of VC life cycle
distribute cash and securities proceeds. usually happens about every 4 years
typical VC fund structure
institutional and individuals are limited partners, direct fund members are GP
carried interest
portion of profits paid to professional venture captialist as incentive compensation
fee structure
- usually %age of assets and carried interest
- around 2% + 20% carried
how VCs typically exit
use M&A, rarely IPO
deal flow
6/1000 deals recieve funding
term sheet
summary of investment terms and conditions accompanying an investment
SLOR
standard letter of rejection
lead investor
vc contributes largest amount of capital
vc vs angel investor
vc pool many investors together, contribute more capital, and more strict
angels are usually individuals
management fee
percentage of assets for fee management, usually 2%
institutional investors
-pension plans, insurance, endowments
finders fee
compensation given to intermediary that finds venture
contingency fee
fee only payable if favorable result. contingent on success
character loans
personal loans
collateral %ages
AR - 80%
inventory - 50%
real property - 75%
higher the safer investment
omsbudsman
independent official selected by government to address complaints of unfair regulation
factoring vs recievables lending
factor is sale of assets, lending uses them as collateral (traditional debt)
differences between traditional and venture banks
venture banks have warrants and equity as sweeteners
common stock voting rights include
- vote board of directions
- substancial corporate policy
- stock issues
