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






2. 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.






3. 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






4. 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) ...






5. 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






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






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






8. 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.






9. 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






10. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






11. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






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






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






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






15. 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.






16. 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






17. How you get to vote






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. Cannot get other outside investors-No Shop






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






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






22. 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






23. The internal rate of return on an investment.






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






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






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






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






28. No double tax - Limited number of investors






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






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






31. How you get out






32. Compound internal rate of return.






33. 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.






34. 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






35. 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.






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






37. An IPO that has met certain






38. 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






39. 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






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






41. 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 -






42. 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






43. 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






44. 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






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






46. How much the company is worth before an investment






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






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






49. 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






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