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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. This refers to obtaining capital from investors or venture capital sources.
Angel Financing
Common Stock
raising capital
debt financing
2. Assets are subject to double taxation - Unlimited number of investors
debt financing
Pre-Money Valuation
Venture Capital Financing
C Corporation
3. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Common Stock
Adjusted Book Value
management buy-in (MBI)
Liquidity Event
4. 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.).
Membership Interest
Book Value
institutional investors
raising capital
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
Post-Money Valuation
return on investment (ROI)
Restricted Stock
executive summary
6. 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.
Common Stock
liquidation
Due Diligence
Liquidity Event
7. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
secondary public offering
term sheet
Liquidation
Preferred Stock
8. 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
Senior Stock
Capitalization Table
Warrants
9. How you get to vote
Limited Partnership Agreement
series a preferred stock
Cash-out election
Voting Rights
10. 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.
Post-money
Bootstrapping
Liquidity Event
return on investment (ROI)
11. 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
Limited Partnership Agreement
NDA (Non-disclosure agreement)
equity financing
12. 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
small business investment companies (SBIC)
minority enterprise small business investment companies (MESBICS)
Dividends
Confidentiality
13. 'I will buy stock at price we negotiate'
buyout
Stock Price Agreement
small business investment companies (SBIC)
capital gain
14. How much the company is worth before an investment
acquisition
Pre-Money Valuation
Corporation (Limited liability and taxation)
Preferred Stock
15. 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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16. 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
Common Equity
debt financing
Closing
Lead Investor
17. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
limited partnerships
capital gain
due diligence
exit
18. 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
Conversion Rights
Pre-Money Valuation
IPO(initial public offerings)
Cash-out election
19. 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.
IPO (Initial Public Offering)
Burn Rate
Angel Financing
recapitalization
20. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
Conversion Rights
Senior Stock
No Shop/Confidentiality
21. 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)
closing
Limited Partnership Agreement
Venture Capitalist
22. 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.
management buy-out (MBO)
lead investor
limited partnerships
private investment in public equities (PIPE)
23. Don't talk to the market about the company
exit
Business Summary
Confidentiality
Common Stock
24. 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.
Burn Rate
turnaround
Limited Partner
lock-up period
25. Document between general and limited partnership of each fund spells out details of the partnership.
Liquidity Event
Limited Partnership Agreement
going private
Market Capitalization
26. Selling an interest in your business to an outside party to raise money.
equity financing
Burn Rate
Capital
No Shop/Confidentiality
27. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
equity offerings
leverage buy-out(LBO)
IPO(initial public offerings)
Restricted Stock
28. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
capital gain
lead investor
Capital Commitment
lock-up period
29. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Post-Money Valuation
limited partnerships
exit
capital under management
30. 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
private equity
going private
Anti-Dilution Protections
bridge loans
31. 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
limited partnerships
venture capital
Post-money
Outstanding Stock
32. The party that manages a limited partnership and is liable for the debts of the company
General Partner (GP)
S Corporation
follow-on
Preferred Stock
33. 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
Elevator Pitch
Cash-out election
Qualified IPO
follow-on
34. Issue of shares of a company to the public by the company (directly) for the first time.
equity offerings
venture capital
IPO(initial public offerings)
seed capital
35. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Restricted Shares
angel investors
management buy-out (MBO)
IPO(initial public offerings)
36. The total value of the company immediately prior to the latest round of financing
Pre-money valuation
return on investment (ROI)
venture capital
management buy-out (MBO)
37. Investments by a private equity fund in a publicly traded company - usually at a discount.
private equity
Bootstrapping
private investment in public equities (PIPE)
limited partnerships
38. 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
turnaround
seed capital
angel investors
Dividends
39. The value at which an asset is carried on a balance sheet (the cost of the item)
Common Stock
Book Value
lead investor
Voting Rights
40. 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
General Partner (GP)
Common Equity
Limited Partnership Agreement
Venture Capitalist
41. The maximum amount of cash that a partner is required to contribute under the terms
Voting Rights
Seed Money
Capital Commitment
Initial Public Offering
42. 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
minority enterprise small business investment companies (MESBICS)
Market Capitalization
Series A Preferred Stock
liquidation
43. 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.
Limited Partner
turnaround
Capitalization Table
return on investment (ROI)
44. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Bootstrapping
corporate venturing
limited partnerships
45. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
due diligence
Burn Rate
lock-up period
46. The company or entity into which a fund invests directly.
Capital Commitment
portfolio compaay
institutional investors
Deal Structure
47. 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.
management buy-in (MBI)
Equity
mezzanine financing
Stock Price Agreement
48. The equity ownership in a corporation. Also has basic voting rights
Common Stock
management buy-in (MBI)
Term Sheet
capital under management
49. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Business Summary
fund of funds
Venture Capitalist
buyout
50. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
mezzanine financing
Senior Stock
Pre-money valuation
Capital Call 'Drawdown'