Test your basic knowledge |

Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...






2. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.






3. Document between general and limited partnership of each fund spells out details of the partnership.






4. 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


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






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






7. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec






8. A study of the background and financial reliability of the company - management team and industry.






9. The total dollar value of all outstanding shares. Computed as shares multiplied by current price per share. Prior to an IPO - market capitalization is arrived at by estimating a company's future growth and by comparing a company with similar public






10. Money used to purchase equity-based interest in a new or existing company. A venture capitalists return usually comes from preferred stock - a share of profits - royalties or capital appreciation of common stock. Most venture capitalists look for c






11. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






12. The way you buy stock






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






14. 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.






15. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






16. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






17. The reorganization of a company's capital structure. A company may seek to save on taxes by replacing preferred stock with bonds in order to gain interest deductibility.






18. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






19. 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.).






20. 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






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






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






23. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative - the company stops being publicly traded. Sometimes - the company might have to take on significant debt to finance the






24. 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.






25. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






26. 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






27. These are lending and investment firms that are licensed by the federal government. The licensing enables them to borrow from the federal government to supplement the private funds of their investors. Some of these funds engage only in making loans t






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






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






30. 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






31. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






32. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project






33. A business owned by stockholders who share in its profits but are not personally responsible for its debts






34. A form of equity ownership in a corporation that contains preferences over common stock - stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights






35. An investment vehicle designed to invest in a diversified group of investment funds.






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






37. 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.






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






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






40. Date the LP's subscription is effective and they become partner






41. Cannot get other outside investors-No Shop






42. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.






43. 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






44. 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






45. An investment in a startup business that is perceived to have excellent growth prospects but does not have access to capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.






46. This refers to a synopsis of the key points of a business plan.






47. 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.






48. 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






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






50. The internal rate of return on an investment.