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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. 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
Capital Commitment
due diligence
Burn Rate
Market Capitalization
2. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
Subordinated Debt
Pre-Money Valuation
Conversion Rights
3. 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
Common Stock
PPM
exit
Capitalization Table
4. 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.
Stock Price Agreement
liquidation
PPM
Book Value
5. Compound internal rate of return.
IRR
C Corporation
minority enterprise small business investment companies (MESBICS)
equity offerings
6. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
C Corporation
Business Summary
Pre-money valuation
7. A security with limits on its transferability. Usually issued in connection with a private placement
mezzanine financing
Senior Stock
fund of funds
Restricted Stock
8. 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
PPM
S Corporation
going private
liquidation
9. 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
going private
No Shop/Confidentiality
benchmarks
Venture Capitalist
10. 'I will buy stock at price we negotiate'
Stock Price Agreement
minority enterprise small business investment companies (MESBICS)
Book Value
mezzanine financing
11. The total value of the company immediately prior to the latest round of financing
acquisition
secondary public offering
Pre-money valuation
S Corporation
12. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Common Equity
Capital
Limited Partnership Agreement
raising capital
13. 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
Venture Capitalist
turnaround
series a preferred stock
Cash-out election
14. Term sheet for equity offering
Term Sheet
secondary public offering
Outstanding Stock
Adjusted Book Value
15. 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
Elevator Pitch
term sheet
NDA (Non-disclosure agreement)
private equity
16. 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.
capital gain
recapitalization
Series A Preferred Stock
Capital Commitment
17. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Cash-out election
minority enterprise small business investment companies (MESBICS)
due diligence
Adjusted Book Value
18. This refers to obtaining capital from investors or venture capital sources.
Membership Interest
Corporation (Limited liability and taxation)
PPM
raising capital
19. The party that manages a limited partnership and is liable for the debts of the company
Post-Money Valuation
syndication
Market Capitalization
General Partner (GP)
20. 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.
portfolio compaay
liquidation
mezzanine financing
term sheet
21. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
Qualified IPO
Preferred Stock
management buy-in (MBI)
Business Plan
22. Assets are subject to double taxation - Unlimited number of investors
C Corporation
Elevator Pitch
mezzanine financing
Due Diligence
23. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
PPM
turnaround
S Corporation
exit
24. Letter of intent summarizing the key legal and financial terms
limited partnerships
Term Sheet
lock-up period
Limited Partnership Agreement
25. The rate of return or profit that an investment is expected to earn.
Internal Rate of Return
Adjusted Book Value
Liquidation
Common Equity
26. The act of one company taking over controlling interest in another company. Investors often look for companies that are likely candidates for this - because the acquiring firms are often willing to pay a premium to the market price for the shares.
Pre-Money Valuation
raising capital
equity offerings
acquisition
27. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Lead Investor
benchmarks
Liquidation
lead investor
28. 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
Internal Rate of Return
Cash-out election
private equity
S Corporation
29. 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
Dividends
mezzanine financing
Limited Partnership Agreement
Liquidation Preference
30. The internal rate of return on an investment.
Bootstrapping
exit route
return on investment (ROI)
Limited Partnership Agreement
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
Book Value
Due Diligence
Market Capitalization
venture capital
32. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
PPM
capital under management
Senior Stock
33. The method by which an investor will realize an investment.
Capital Call 'Drawdown'
exit route
corporate venturing
Liquidation
34. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
buyout
leverage buy-out(LBO)
Liquidity Event
Restricted Shares
35. 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.
Capitalization Table
Bootstrapping
Liquidity Event
Seed Money
36. Selling an interest in your business to an outside party to raise money.
executive summary
equity financing
going private
Preferred Stock
37. The company or entity into which a fund invests directly.
portfolio compaay
Voting Rights
Initial Public Offering
Capital Commitment
38. A business owned by stockholders who share in its profits but are not personally responsible for its debts
IPO(initial public offerings)
bridge loans
Series A Preferred Stock
Corporation (Limited liability and taxation)
39. 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.
Preferred Stock
Equity
Limited Partnership Agreement
secondary public offering
40. 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.
private equity
return on investment (ROI)
management buy-in (MBI)
management buy-out (MBO)
41. 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.
Voting Rights
Series A Preferred Stock
Outstanding Stock
going private
42. 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
Common Stock
Cash-out election
Stock Price Agreement
Voting Rights
43. 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
raising capital
syndication
Preferred Stock
fund of funds
44. How you get out
Adjusted Book Value
Term Sheet
Liquidation Preference
Lead Investor
45. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
liquidation
recapitalization
Business Summary
Common Equity
46. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
benchmarks
Capital Commitment
Warrants
Subordinated Debt
47. The rate at which a company expends net cash over a certain period - usually a month.
buyout
Voting Rights
Burn Rate
Anti-Dilution Protections
48. The first round of capital for a start-up business. Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds - although sometimes it is common stock. Seed money provides startup companies with the cap
Business Plan
PPM
Outstanding Stock
Seed Money
49. 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
private investment in public equities (PIPE)
leverage buy-out(LBO)
Restricted Shares
Capital Call 'Drawdown'
50. Issue of shares of a company to the public by the company (directly) for the first time.
Private Equity
going private
Seed Money
IPO(initial public offerings)