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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.
follow-on
Book Value
closing
private equity
2. The amount of this available to a management team for venture investments.
Capital
capital under management
Equity
Initial Public Offering
3. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
term sheet
Anti-Dilution Protections
private equity
4. 'I will buy stock at price we negotiate'
C Corporation
Senior Stock
Lead Investor
Stock Price Agreement
5. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
General Partner (GP)
due diligence
capital gain
NDA (Non-disclosure agreement)
6. A security with limits on its transferability. Usually issued in connection with a private placement
corporate venturing
bridge loans
Restricted Stock
Warrants
7. The practice of a large company taking a minority equity position in a smaller company in a related field.
Warrants
corporate venturing
Capitalization Table
Bridge Financing
8. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Limited Partnership Agreement
Corporation (Limited liability and taxation)
Capital Commitment
IPO(initial public offerings)
9. The residual ownership in a company like a corporation or LLC 51%=control
Post-Money Valuation
Equity
Liquidity Event
seed capital
10. 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
Post-Money Valuation
Series A Preferred Stock
Pre-Money Valuation
institutional investors
11. 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
mezzanine financing
acquisition
No Shop/Confidentiality
Common Stock
12. 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
secondary public offering
Bootstrapping
Venture Capital Financing
Cash-out election
13. 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
Restricted Shares
IRR
Angel Financing
14. 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
Private Equity
Restricted Shares
bridge loans
Seed Money
15. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Lead Investor
Adjusted Book Value
Voting Rights
term sheet
16. 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
Business Plan
debt financing
Burn Rate
equity financing
17. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Qualified IPO
Series A Preferred Stock
Pre-Money Valuation
Common Equity
18. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
exit
Liquidation
Senior Stock
capital under management
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. The way you buy stock
Equity
IRR
Anti-Dilution Protections
PPM
21. 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
Liquidation Preference
institutional investors
Venture Capitalist
small business investment companies (SBIC)
22. 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.
Venture Capital Financing
IPO(initial public offerings)
Pre-Money Valuation
Venture Capitalist
23. The company or entity into which a fund invests directly.
portfolio compaay
capital under management
Pre-money valuation
Deal Structure
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
equity financing
Book Value
IPO (Initial Public Offering)
25. The total value of the company immediately prior to the latest round of financing
debt financing
Corporation (Limited liability and taxation)
Pre-money valuation
Book Value
26. How you get to vote
Voting Rights
Preferred Stock
Cash-out election
raising capital
27. 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.
mezzanine financing
Common Stock
secondary purchase
executive summary
28. 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.
Capital Call 'Drawdown'
Capital
Post-Money Valuation
recapitalization
29. 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
raising capital
Elevator Pitch
small business investment companies (SBIC)
benchmarks
30. 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
secondary purchase
Term Sheet
Preferred Stock
31. 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) ...
Common Equity
Venture Capital Financing
Limited Partnership Agreement
Initial Public Offering
32. The value at which an asset is carried on a balance sheet (the cost of the item)
Book Value
secondary purchase
Elevator Pitch
Common Stock
33. 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.
Series A Preferred Stock
secondary public offering
lead investor
Bootstrapping
34. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
capital under management
management buy-in (MBI)
benchmarks
PPM
35. 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 -
limited partnerships
Dividends
Pre-Money Valuation
minority enterprise small business investment companies (MESBICS)
36. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
mezzanine financing
due diligence
Restricted Shares
Venture Capitalist
37. Selling an interest in your business to an outside party to raise money.
Pre-Money Valuation
institutional investors
closing
equity financing
38. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
NDA (Non-disclosure agreement)
Restricted Shares
leverage buy-out(LBO)
Confidentiality
39. 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
portfolio compaay
Private Equity
Venture Capital Financing
Seed Money
40. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Seed Money
Pre-money valuation
going private
exit
41. Investments by a private equity fund in a publicly traded company - usually at a discount.
private investment in public equities (PIPE)
seed capital
leverage buy-out(LBO)
syndication
42. 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
benchmarks
small business investment companies (SBIC)
Closing
Series A Preferred Stock
43. Don't talk to the market about the company
Term Sheet
lead investor
Preferred Stock
Confidentiality
44. The equity ownership in a corporation. Also has basic voting rights
C Corporation
Common Stock
Post-money
Liquidation Preference
45. An IPO that has met certain
Qualified IPO
Internal Rate of Return
Capitalization Table
Pre-Money Valuation
46. Pre-money valuation plus the amount invested in the latest round
equity offerings
term sheet
Liquidation
Post-money
47. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Lead Investor
capital gain
Pre-Money Valuation
NDA (Non-disclosure agreement)
48. 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
Business Summary
going private
mezzanine financing
Anti-Dilution Protections
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.
seed capital
Capital
Bootstrapping
Adjusted Book Value
50. 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
bridge loans
fund of funds
Equity
Pre-Money Valuation