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






2. Cash - stock and other property by the company to the investor in the investor's capacity as a stock - payment to owner for their appreciation






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






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






5. The internal rate of return on an investment.






6. 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






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






8. 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.






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






10. 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






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






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






13. 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.






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






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. An IPO that has met certain






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






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






19. 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.






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






21. 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.






22. 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






23. 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 -






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 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.






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






27. 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.






28. 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






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






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






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






32. 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






33. 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






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






35. 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






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






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






38. No double tax - Limited number of investors






39. 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.






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






41. 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






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






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






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






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






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






47. 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






48. 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






49. Compound internal rate of return.






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