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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. 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.
equity financing
secondary public offering
Adjusted Book Value
Bridge Financing
2. 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
Preferred Stock
secondary purchase
Book Value
IPO(initial public offerings)
3. These are performance goals against which a company's success is measured. Often - they are used by investors to help determine whether a company will receive additional funding or whether management will receive extra stock. Sometimes management wi
Closing
General Partner (GP)
corporate venturing
benchmarks
4. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
Qualified IPO
Common Stock
Adjusted Book Value
5. 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.
lock-up period
limited partnerships
secondary public offering
executive summary
6. 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
Dividends
Voting Rights
Due Diligence
management buy-out (MBO)
7. How you get to vote
Senior Stock
Voting Rights
leverage buy-out(LBO)
equity financing
8. 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
Limited Partner
debt financing
Restricted Shares
Voting Rights
9. The maximum amount of cash that a partner is required to contribute under the terms
Pre-money valuation
Capital Commitment
series a preferred stock
Voting Rights
10. 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
going private
Capitalization Table
IPO(initial public offerings)
follow-on
11. 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) ...
Initial Public Offering
secondary purchase
equity offerings
Preferred Stock
12. The method by which an investor will realize an investment.
exit route
Market Capitalization
secondary purchase
angel investors
13. Letter of intent summarizing the key legal and financial terms
Preferred Stock
Liquidation Preference
minority enterprise small business investment companies (MESBICS)
Term Sheet
14. 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
private equity
Cash-out election
Liquidation Preference
going private
15. Compound internal rate of return.
IRR
Restricted Shares
Warrants
Deal Structure
16. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
Subordinated Debt
Series A Preferred Stock
closing
syndication
17. The amount of this available to a management team for venture investments.
capital under management
liquidation
seed capital
Preferred Stock
18. 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.
syndication
Pre-Money Valuation
Bridge Financing
buyout
19. 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
20. A business owned by stockholders who share in its profits but are not personally responsible for its debts
recapitalization
acquisition
Liquidation Preference
Corporation (Limited liability and taxation)
21. 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
Bridge Financing
Preferred Stock
series a preferred stock
secondary purchase
22. 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
Internal Rate of Return
secondary purchase
Conversion Rights
seed capital
23. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Capital Call 'Drawdown'
capital gain
Angel Financing
exit
24. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Capital Commitment
Post-money
Anti-Dilution Protections
Bootstrapping
25. 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.
Anti-Dilution Protections
mezzanine financing
Book Value
Liquidation
26. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Closing
Subordinated Debt
IPO (Initial Public Offering)
raising capital
27. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Warrants
institutional investors
Post-money
28. 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 -
Venture Capitalist
Common Stock
Seed Money
limited partnerships
29. An investment vehicle designed to invest in a diversified group of investment funds.
venture capital
fund of funds
Deal Structure
small business investment companies (SBIC)
30. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
Stock Price Agreement
Post-money
bridge loans
31. The internal rate of return on an investment.
Venture Capitalist
Term Sheet
Corporation (Limited liability and taxation)
return on investment (ROI)
32. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
IRR
Venture Capital Financing
Private Equity
33. 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
Limited Partner
Market Capitalization
Initial Public Offering
Conversion Rights
34. 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
small business investment companies (SBIC)
Restricted Stock
Subordinated Debt
Series A Preferred Stock
35. Don't talk to the market about the company
benchmarks
Adjusted Book Value
IPO (Initial Public Offering)
Confidentiality
36. 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.
Cash-out election
lock-up period
Venture Capitalist
raising capital
37. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
IRR
Warrants
Conversion Rights
38. Pre-money valuation plus the amount invested in the latest round
Pre-money valuation
Subordinated Debt
Post-money
Series A Preferred Stock
39. This refers to obtaining capital from investors or venture capital sources.
Preferred Stock
Capital
turnaround
raising capital
40. Issue of shares of a company to the public by the company (directly) for the first time.
private equity
IPO(initial public offerings)
secondary public offering
buyout
41. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell
Pre-Money Valuation
debt financing
Private Equity
liquidation
42. The party that manages a limited partnership and is liable for the debts of the company
Conversion Rights
General Partner (GP)
Capitalization Table
return on investment (ROI)
43. Document between general and limited partnership of each fund spells out details of the partnership.
Capital Commitment
Liquidation
Limited Partnership Agreement
Market Capitalization
44. 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.
liquidation
Preferred Stock
Restricted Stock
small business investment companies (SBIC)
45. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Capitalization Table
Dividends
Pre-Money Valuation
due diligence
46. The company or entity into which a fund invests directly.
portfolio compaay
Liquidation Preference
IPO(initial public offerings)
Cash-out election
47. 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
Dividends
Term Sheet
Seed Money
Qualified IPO
48. A study of the background and financial reliability of the company - management team and industry.
return on investment (ROI)
Lead Investor
Due Diligence
syndication
49. No double tax - Limited number of investors
Bootstrapping
Restricted Shares
Pre-money valuation
S Corporation
50. 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
IPO (Initial Public Offering)
Term Sheet
Common Equity
going private