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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. 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






2. Cannot get other outside investors-No Shop






3. 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






4. 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






5. 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.






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






7. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






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






9. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






10. 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






11. 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






12. This word is used to describe businesses that are in trouble and whose management will cause the business to become profitable so they are no longer in trouble.






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






14. The residual ownership in a company like a corporation or LLC 51%=control






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






16. 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






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






18. 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.






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






20. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities






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






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






23. 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






24. 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






25. Document between general and limited partnership of each fund spells out details of the partnership.






26. 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






27. 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.






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






29. 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.






30. A non-binding agreement setting forth the basic terms and conditions under which an investment will be made. This is a template that is used to develop more detailed legal documents.






31. 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






32. 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






33. 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.






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






35. 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

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36. The amount of this available to a management team for venture investments.






37. 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






38. A study of the background and financial reliability of the company - management team and industry.






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






40. Term sheet for equity offering






41. The maximum amount of cash that a partner is required to contribute under the terms






42. 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.






43. 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.






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






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






46. 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






47. 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.






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






49. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






50. 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.