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Test your basic knowledge |
Venture Capital
Start Test
Study First
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. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
NDA (Non-disclosure agreement)
Pre-Money Valuation
Qualified IPO
acquisition
2. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
lock-up period
capital gain
term sheet
3. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
venture capital
Liquidity Event
secondary public offering
institutional investors
4. 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
NDA (Non-disclosure agreement)
benchmarks
IRR
Lead Investor
5. The investor who leads a group of investors into an investment. Usually one venture capitalist will be this when a group of venture capitalists invest in a single business.
small business investment companies (SBIC)
lead investor
recapitalization
Term Sheet
6. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
mezzanine financing
lock-up period
portfolio compaay
7. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
follow-on
corporate venturing
debt financing
Membership Interest
8. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell
Private Equity
due diligence
Capital
venture capital
9. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Business Plan
exit route
C Corporation
capital gain
10. How you get to vote
Capital Call 'Drawdown'
Voting Rights
private investment in public equities (PIPE)
Due Diligence
11. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
C Corporation
Adjusted Book Value
Series A Preferred Stock
12. The method by which an investor will realize an investment.
Capitalization Table
turnaround
exit route
Subordinated Debt
13. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Conversion Rights
debt financing
liquidation
Adjusted Book Value
14. 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
Elevator Pitch
Senior Stock
Post-Money Valuation
venture capital
15. The value at which an asset is carried on a balance sheet (the cost of the item)
recapitalization
Book Value
Internal Rate of Return
secondary public offering
16. 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
Confidentiality
Qualified IPO
Seed Money
General Partner (GP)
17. 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
Business Plan
limited partnerships
bridge loans
term sheet
18. How you get out
Outstanding Stock
buyout
series a preferred stock
Liquidation Preference
19. 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 -
limited partnerships
return on investment (ROI)
private investment in public equities (PIPE)
due diligence
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
Venture Capitalist
minority enterprise small business investment companies (MESBICS)
series a preferred stock
Deal Structure
21. A security with limits on its transferability. Usually issued in connection with a private placement
Restricted Stock
Capital
venture capital
benchmarks
22. 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.
buyout
follow-on
Conversion Rights
Business Plan
23. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Preferred Stock
management buy-in (MBI)
Senior Stock
C Corporation
24. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Anti-Dilution Protections
Warrants
Pre-money valuation
Angel Financing
25. This refers to obtaining capital from investors or venture capital sources.
corporate venturing
raising capital
seed capital
closing
26. 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
Market Capitalization
Lead Investor
Bridge Financing
Business Plan
27. The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.
liquidation
No Shop/Confidentiality
Seed Money
syndication
28. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
Restricted Shares
secondary purchase
Post-Money Valuation
29. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Preferred Stock
Senior Stock
Term Sheet
limited partnerships
30. Compound internal rate of return.
Series A Preferred Stock
IRR
Elevator Pitch
buyout
31. 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
equity financing
C Corporation
Common Equity
Restricted Shares
32. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Post-Money Valuation
capital gain
management buy-out (MBO)
Capital
33. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Private Equity
lead investor
Subordinated Debt
institutional investors
34. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Bootstrapping
Common Stock
Pre-money valuation
Membership Interest
35. 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
secondary purchase
Post-Money Valuation
exit
Cash-out election
36. 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.
capital gain
Preferred Stock
buyout
Seed Money
37. Cannot get other outside investors-No Shop
limited partnerships
Adjusted Book Value
No Shop/Confidentiality
lead investor
38. 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.).
institutional investors
Bootstrapping
Closing
Stock Price Agreement
39. 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
seed capital
Venture Capital Financing
management buy-out (MBO)
Bridge Financing
40. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
debt financing
closing
Membership Interest
IRR
41. 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.
IPO (Initial Public Offering)
Capital Call 'Drawdown'
Outstanding Stock
PPM
42. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Preferred Stock
Venture Capital Financing
Adjusted Book Value
Common Equity
43. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
lock-up period
Capital
Seed Money
Anti-Dilution Protections
44. 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
Outstanding Stock
Angel Financing
PPM
benchmarks
45. 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.
Term Sheet
due diligence
minority enterprise small business investment companies (MESBICS)
management buy-in (MBI)
46. 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.
Venture Capital Financing
executive summary
Bootstrapping
lock-up period
47. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
acquisition
equity financing
seed capital
Cash-out election
48. 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.
Pre-money valuation
Restricted Stock
liquidation
Pre-Money Valuation
49. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
S Corporation
turnaround
secondary public offering
Post-money
50. 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.
recapitalization
Pre-Money Valuation
lock-up period
Outstanding Stock