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. Investments by a private equity fund in a publicly traded company - usually at a discount.






2. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






3. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






4. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -






5. 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.






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






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






8. How you get to vote






9. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi






10. Assets are subject to double taxation - Unlimited number of investors






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






12. 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) ...






13. 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.






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






15. 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.).






16. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no






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






18. The way you buy stock






19. 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






20. 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






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






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






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






24. The method by which an investor will realize an investment.






25. 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






26. An IPO that has met certain






27. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap






28. No double tax - Limited number of investors






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






30. Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration - or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares






31. Pre-money valuation plus the amount invested in the latest round






32. 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.






33. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s






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






35. 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






36. 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






37. These are government-chartered venture firms that can invest only in companies that are at least 51 percent owned by members of a minority group or person recognized by the rules that govern this to be economically disadvantaged.






38. 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.






39. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






40. 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






41. How much the company is worth before an investment






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






43. 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.






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






45. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






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






47. The amount of this available to a management team for venture investments.






48. How you get out






49. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






50. The sale of the assets of a portfolio company to one or more acquirers when venture capital investors receive some of the proceeds of the sale.