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






2. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c






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






4. Cannot get other outside investors-No Shop






5. 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






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






7. No double tax - Limited number of investors






8. 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.






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






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






11. 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






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






13. 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


14. 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






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






16. An IPO that has met certain






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






18. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






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






20. 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.






21. 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






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






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






24. 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






25. The maximum amount of cash that a partner is required to contribute under the terms






26. 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.






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






28. 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.






29. 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.






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






31. 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






32. How you get to vote






33. 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.






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






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






36. The party that manages a limited partnership and is liable for the debts of the company






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






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






39. Term sheet for equity offering






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






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






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






43. 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






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






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






46. 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






47. 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






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






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






50. 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