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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. 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






2. The rate at which a company expends net cash over a certain period - usually a month.






3. 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.






4. 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






5. 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






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






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






8. 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






9. An IPO that has met certain






10. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






11. How you get to vote






12. 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






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






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






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






16. The total value of the company immediately prior to the latest round of financing






17. 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.






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






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






20. 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.






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






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






23. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






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






25. 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.






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






27. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






28. 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






29. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






30. 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.






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






32. 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.






33. 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






34. Cannot get other outside investors-No Shop






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






36. 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.






37. 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






38. Term sheet for equity offering






39. 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.






40. 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 -






41. How much the company is worth before an investment






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. 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






44. 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.






45. The internal rate of return on an investment.






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






47. 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






48. 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.






49. Date the LP's subscription is effective and they become partner






50. 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