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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. 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
Corporation (Limited liability and taxation)
series a preferred stock
exit route
2. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
capital gain
Bridge Financing
closing
Equity
3. Document between general and limited partnership of each fund spells out details of the partnership.
Venture Capital Financing
Closing
No Shop/Confidentiality
Limited Partnership Agreement
4. 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
5. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
leverage buy-out(LBO)
fund of funds
return on investment (ROI)
6. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Pre-money valuation
recapitalization
Qualified IPO
Business Summary
7. 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
Business Plan
Venture Capital Financing
minority enterprise small business investment companies (MESBICS)
Lead Investor
8. A study of the background and financial reliability of the company - management team and industry.
liquidation
Due Diligence
Initial Public Offering
Liquidity Event
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
Anti-Dilution Protections
Market Capitalization
series a preferred stock
turnaround
10. 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
Initial Public Offering
Closing
equity offerings
venture capital
11. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Closing
Stock Price Agreement
angel investors
lead investor
12. The way you buy stock
Private Equity
management buy-in (MBI)
PPM
Post-Money Valuation
13. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
leverage buy-out(LBO)
Senior Stock
Elevator Pitch
Limited Partnership Agreement
14. Funds provided to enable operating management to acquire a product line or business - which may be at any stage of development - from either a public or private company.
institutional investors
management buy-out (MBO)
No Shop/Confidentiality
leverage buy-out(LBO)
15. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
PPM
IPO (Initial Public Offering)
Warrants
buyout
16. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
IPO(initial public offerings)
Liquidity Event
Angel Financing
IPO (Initial Public Offering)
17. 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.
Common Stock
Venture Capital Financing
Qualified IPO
recapitalization
18. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
syndication
Term Sheet
Conversion Rights
IRR
19. 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.).
Subordinated Debt
Bridge Financing
Private Equity
institutional investors
20. 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
Deal Structure
Liquidation Preference
private investment in public equities (PIPE)
Limited Partner
21. Issue of shares of a company to the public by the company (directly) for the first time.
seed capital
going private
limited partnerships
IPO(initial public offerings)
22. The value at which an asset is carried on a balance sheet (the cost of the item)
portfolio compaay
Book Value
Private Equity
Common Equity
23. 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
Pre-Money Valuation
private investment in public equities (PIPE)
secondary public offering
going private
24. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.
Outstanding Stock
Post-Money Valuation
capital under management
Corporation (Limited liability and taxation)
25. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
small business investment companies (SBIC)
Capital Call 'Drawdown'
Pre-money valuation
secondary purchase
26. 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
bridge loans
debt financing
Warrants
Capital Call 'Drawdown'
27. 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)
management buy-in (MBI)
term sheet
Common Stock
28. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
exit route
Preferred Stock
return on investment (ROI)
Angel Financing
29. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Angel Financing
Common Stock
equity financing
capital gain
30. A financial institution specializing in the provision of equity and other forms of long-term capital to enterprises - usually to firms with a limited track record but with the expectation of substantial growth. The venture capitalist may provide bot
acquisition
Initial Public Offering
Venture Capitalist
due diligence
31. 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.
venture capital
Deal Structure
Equity
IPO(initial public offerings)
32. Also known as a bell cow investor. Member of a syndicate of private equity investors holding the largest stake - in charge of arranging the financing and most actively involved in the overall project
equity offerings
IPO (Initial Public Offering)
Lead Investor
private investment in public equities (PIPE)
33. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Term Sheet
private equity
Corporation (Limited liability and taxation)
Qualified IPO
34. 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
Confidentiality
closing
General Partner (GP)
Preferred Stock
35. An investment vehicle designed to invest in a diversified group of investment funds.
Capital Commitment
Subordinated Debt
Outstanding Stock
fund of funds
36. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Pre-money valuation
Business Summary
Liquidation Preference
Adjusted Book Value
37. 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.
PPM
Capital Commitment
Qualified IPO
Preferred Stock
38. The rate of return or profit that an investment is expected to earn.
Post-money
Internal Rate of Return
Book Value
Lead Investor
39. The company or entity into which a fund invests directly.
portfolio compaay
Liquidation Preference
leverage buy-out(LBO)
Liquidity Event
40. Date the LP's subscription is effective and they become partner
follow-on
angel investors
Closing
Restricted Stock
41. Cannot get other outside investors-No Shop
No Shop/Confidentiality
Equity
leverage buy-out(LBO)
Angel Financing
42. 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.
follow-on
Limited Partnership Agreement
Liquidation Preference
Warrants
43. 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
No Shop/Confidentiality
IPO (Initial Public Offering)
Series A Preferred Stock
Adjusted Book Value
44. 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
Confidentiality
Due Diligence
IPO (Initial Public Offering)
Adjusted Book Value
45. 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.
Liquidation
Venture Capital Financing
Term Sheet
turnaround
46. This refers to a synopsis of the key points of a business plan.
executive summary
raising capital
turnaround
Deal Structure
47. 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.
Common Equity
Capital Commitment
leverage buy-out(LBO)
Bridge Financing
48. 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
acquisition
Preferred Stock
Stock Price Agreement
Liquidation Preference
49. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
management buy-out (MBO)
equity offerings
Equity
Lead Investor
50. The internal rate of return on an investment.
exit route
mezzanine financing
Venture Capitalist
return on investment (ROI)