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






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






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






4. Cannot get other outside investors-No Shop






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






6. 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






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






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






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






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






11. 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.






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






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






14. 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






15. 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






16. 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






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






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






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






20. 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






21. 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






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






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






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






25. 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






26. Term sheet for equity offering






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






28. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






29. 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) ...






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






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






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






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






34. 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






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






36. 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


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






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






39. 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






40. 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.






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






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






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






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






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






46. The total value of the company immediately prior to the latest round of financing






47. 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.






48. An IPO that has met certain






49. 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.






50. 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.