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. Don't talk to the market about the company






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






3. 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






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






5. The valuation of a company immediately after the most recent round of financing. For example - a venture capitalist may invest $3.5 million in a company valued at $2 million 'pre-money' (before the investment was made). As a result - the startup will






6. 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.






7. 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.






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






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






10. 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






11. Investments by a private equity fund in a publicly traded company - usually at a discount.






12. An IPO that has met certain






13. 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






14. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value






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






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






17. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






18. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.






19. Assets are subject to double taxation - Unlimited number of investors






20. 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.






21. Term sheet for equity offering






22. The practice of a large company taking a minority equity position in a smaller company in a related field.






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






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






25. 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.






26. 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






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






28. 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.






29. An extremely concise presentation of an entrepreneur's idea - business model - company solution - marketing strategy - and competition delivered to potential investors. Should not last more than a few minutes - or the duration of an elevator rid






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






31. 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.






32. The equity ownership in a LLC. May be either common or preferred. Partnership agreement






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.






34. A class of capital stock that may pay dividends at a specified rate and that has priority over common stock in the payment of dividends and the liquidation of assets. Many venture capital investments use preferred stock as their investment vehicle. T






35. How much the company is worth before an investment






36. 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






37. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






38. 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






39. 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






40. 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






41. Compound internal rate of return.






42. 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.






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






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






45. 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.






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






47. The rate of return or profit that an investment is expected to earn.






48. 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.






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






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