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






2. 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.






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






4. 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.






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






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






7. The way you buy stock






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






9. 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) ...






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






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






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






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






14. 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.






15. 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






16. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






17. The rate at which a company expends net cash over a certain period - usually a month.






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






19. 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






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






21. 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.






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






23. 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






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






25. 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






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






27. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.






28. 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






29. An IPO that has met certain






30. 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 -






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






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






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






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






35. Don't talk to the market about the company






36. 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






37. 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






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






39. 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.






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






41. 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






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






43. 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






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






45. 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






46. How you get out






47. 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.






48. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






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






50. The residual ownership in a company like a corporation or LLC 51%=control