Equity Flashcards

1
Q

Venture capital

A

Venture capital is a financial capital invested in a new or rapidly expanding business economy where there is a high level of risk.

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2
Q

What is the essence of venture capital

A

Venture capital is the purchase of equity in a business

It is usually involved private company and unlisted public company

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3
Q

What accounting equation describe

A

The accounting equation describe as a equation of use of funds and of the source of funds

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4
Q

What is venture capital usually done

A

Venture capital is an injection of equity in a business, and it is usually done in cash.

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5
Q

Purpose of venture capital

A

The purpose of venture capital is to grow the business. It does this by providing additional assets.

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6
Q

What decision need precious owner to do

A

When the VC investor decides to purchase equity,the original owner must decide to either sell their own shares or create new shares

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7
Q

What does equity investment change

A

Equity investment change the size of equity and also the make/up of equity

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8
Q

Do equity need to be repaid?

A

No there is no obligation to repay investments that are made in the form of equity

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9
Q

The venture capital provides cash, but the business may use this cash to

A

Buy more machinery
Buy more stock
Hire more people
Advertise in new products

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10
Q

Exit strategy

A

An investor ‘a plan for getting their investment back and potentially realizing a profit

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11
Q

Break-even point

A

Where total costs equal total income from sales and the company makes neither a profit or loss

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12
Q

Personnel

A

The people who are employed in an organization

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13
Q

Sales forecast

A

The sales business expect to achieve in a particular period of time

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14
Q

Revenue

A

The oral income received from business before any expenses are paid

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15
Q

Competitive advantage

A

What an organization can do better than its competitors

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16
Q

Sustainable

A

Able to continue over a period of time

17
Q

Founder

A

The people who establish a company or other organization

18
Q

why venture capital is considered more risk

A

It is in the form of equity and never needs to be repaid

It is often on a small or fast growing business that has a very short track-record

19
Q

Why people buy venture capital

A

the returns can be enormous