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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. Term sheet for equity offering






2. 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.






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






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






5. 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.






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






7. 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






8. This refers to obtaining capital from investors or venture capital sources.






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






10. 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






11. The internal rate of return on an investment.






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






13. 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






14. 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






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






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






17. 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.






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






19. 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






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






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






22. 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






23. 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






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






25. How much the company is worth before an investment






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






27. No double tax - Limited number of investors






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






29. 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.






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






31. How you get out






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






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






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






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. 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






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






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






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






40. 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






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






42. 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






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






44. 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






45. 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






46. This refers to a synopsis of the key points of a business plan.






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






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






49. 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






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