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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. An IPO that has met certain






2. 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.






3. 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.






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






5. The internal rate of return on an investment.






6. 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.






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






8. 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.).






9. 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






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






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






12. 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.






13. The way you buy stock






14. 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.






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






16. 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






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






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






19. 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.






20. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan






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






22. 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






23. Don't talk to the market about the company






24. A business owned by stockholders who share in its profits but are not personally responsible for its debts






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






26. Term sheet for equity offering






27. 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.






28. An investment vehicle designed to invest in a diversified group of investment funds.






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






30. 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






31. 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






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






33. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.






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






35. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.






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






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






38. 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






39. 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.






40. 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






41. 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






42. 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.






43. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






44. 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






45. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment. During peri






46. 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.






47. 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






48. Letter of intent summarizing the key legal and financial terms






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






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