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Test your basic knowledge |
Venture Capital
Start Test
Study First
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. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Anti-Dilution Protections
equity offerings
Pre-money valuation
closing
2. The company or entity into which a fund invests directly.
series a preferred stock
Pre-Money Valuation
portfolio compaay
corporate venturing
3. The residual ownership in a company like a corporation or LLC 51%=control
executive summary
No Shop/Confidentiality
fund of funds
Equity
4. 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
venture capital
PPM
private equity
going private
5. The way you buy stock
PPM
debt financing
Liquidation Preference
Venture Capital Financing
6. 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.
Liquidation
private investment in public equities (PIPE)
minority enterprise small business investment companies (MESBICS)
Conversion Rights
7. The maximum amount of cash that a partner is required to contribute under the terms
secondary public offering
Warrants
Capital Commitment
IRR
8. 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.
Deal Structure
term sheet
angel investors
due diligence
9. A limited amount of equity or short-term debt financing typically raised within 6-18 months of an anticipated public offering or private placement meant to 'bridge' a company to the next round of financing.
Corporation (Limited liability and taxation)
Bridge Financing
No Shop/Confidentiality
IPO (Initial Public Offering)
10. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
debt financing
turnaround
follow-on
Anti-Dilution Protections
11. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
Liquidation Preference
secondary public offering
Limited Partner
12. 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.
secondary public offering
Qualified IPO
Private Equity
Preferred Stock
13. 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
Book Value
limited partnerships
seed capital
return on investment (ROI)
14. 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) ...
raising capital
Pre-Money Valuation
Initial Public Offering
Liquidity Event
15. Assets are subject to double taxation - Unlimited number of investors
Internal Rate of Return
Cash-out election
C Corporation
Bootstrapping
16. The rate at which a company expends net cash over a certain period - usually a month.
Qualified IPO
Senior Stock
Burn Rate
Liquidation
17. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Equity
debt financing
portfolio compaay
capital gain
18. 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
series a preferred stock
secondary public offering
Pre-Money Valuation
PPM
19. The equity ownership in a corporation. Also has basic voting rights
due diligence
institutional investors
Common Stock
Liquidation Preference
20. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Term Sheet
Capital
management buy-out (MBO)
IPO(initial public offerings)
21. The practice of a large company taking a minority equity position in a smaller company in a related field.
exit
PPM
private equity
corporate venturing
22. 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.
exit
syndication
Venture Capitalist
Common Stock
23. 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.
Business Summary
mezzanine financing
Liquidation Preference
recapitalization
24. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
acquisition
leverage buy-out(LBO)
Stock Price Agreement
benchmarks
25. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no
Angel Financing
Stock Price Agreement
Post-Money Valuation
private equity
26. 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.
recapitalization
small business investment companies (SBIC)
private equity
Due Diligence
27. The method by which an investor will realize an investment.
exit route
acquisition
Membership Interest
return on investment (ROI)
28. The amount of this available to a management team for venture investments.
Qualified IPO
capital under management
Common Equity
Internal Rate of Return
29. 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.
NDA (Non-disclosure agreement)
follow-on
turnaround
Venture Capital Financing
30. 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
going private
Qualified IPO
venture capital
Common Equity
31. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
exit route
seed capital
Pre-Money Valuation
Subordinated Debt
32. 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
Pre-Money Valuation
institutional investors
Closing
Term Sheet
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
lock-up period
Voting Rights
Conversion Rights
small business investment companies (SBIC)
34. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Limited Partnership Agreement
management buy-in (MBI)
Preferred Stock
Restricted Shares
35. 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.
Stock Price Agreement
lock-up period
Post-money
Pre-Money Valuation
36. 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.
bridge loans
Venture Capital Financing
Preferred Stock
secondary public offering
37. 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
Market Capitalization
Book Value
Stock Price Agreement
Post-money
38. An IPO that has met certain
Qualified IPO
Market Capitalization
Business Plan
Common Stock
39. 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.
Cash-out election
management buy-out (MBO)
lead investor
secondary purchase
40. 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.).
institutional investors
Anti-Dilution Protections
secondary purchase
Bootstrapping
41. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
fund of funds
Capital Commitment
recapitalization
exit
42. The internal rate of return on an investment.
return on investment (ROI)
acquisition
executive summary
secondary purchase
43. How you get to vote
No Shop/Confidentiality
exit route
Voting Rights
secondary public offering
44. 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
Angel Financing
Corporation (Limited liability and taxation)
Business Plan
Deal Structure
45. Document between general and limited partnership of each fund spells out details of the partnership.
acquisition
Limited Partnership Agreement
closing
Pre-Money Valuation
46. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Qualified IPO
Book Value
return on investment (ROI)
due diligence
47. Term sheet for equity offering
Term Sheet
private investment in public equities (PIPE)
lock-up period
private equity
48. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Term Sheet
follow-on
Closing
49. Means of financing a small firm by employing highly creative ways of using and acquiring resources without raising equity from traditional sources or borrowing money from the bank.
Capital
lock-up period
Bootstrapping
Liquidation Preference
50. Letter of intent summarizing the key legal and financial terms
Term Sheet
capital under management
Capital Call 'Drawdown'
Book Value