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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though l






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






3. Cannot get other outside investors-No Shop






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






6. 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






7. 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


8. 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






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






10. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






11. This refers to obtaining capital from investors or venture capital sources.






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






13. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






14. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






15. 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






16. The practice of a large company taking a minority equity position in a smaller company in a related field.






17. 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






18. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






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






20. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






21. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






22. Allows the holder to choose whether a merge or sale will be treated as a liquidation event for the purpose of receiving the funds they are entitled to under the liquidation preferences of the term sheet






23. The period an investor must wait before selling or trading company shares subsequent to an exit. Usually in an initial public offering this period is determined by the underwriters.






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






25. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






26. 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






27. 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






28. How much the company is worth before an investment






29. A security with limits on its transferability. Usually issued in connection with a private placement






30. 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.






31. 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






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






33. 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






34. 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.






35. 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.).






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






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






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






40. A unit of ownership of a corporation. In the case of a public company - the stock is traded between investors on various exchanges. Owners of common stock are typically entitled to vote on the selection of directors and other important events and in






41. The equity ownership in a corporation. Also has basic voting rights






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






43. 'I will buy stock at price we negotiate'






44. 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.






45. Selling an interest in your business to an outside party to raise money.






46. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






47. Letter of intent summarizing the key legal and financial terms






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






49. An IPO that has met certain






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