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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. 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
management buy-out (MBO)
IPO (Initial Public Offering)
benchmarks
institutional investors
2. 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.
fund of funds
mezzanine financing
due diligence
Adjusted Book Value
3. 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
fund of funds
mezzanine financing
Post-Money Valuation
4. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
private equity
Restricted Shares
Dividends
5. 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
equity financing
Preferred Stock
leverage buy-out(LBO)
Common Stock
6. Pre-money valuation plus the amount invested in the latest round
Liquidity Event
Post-money
Deal Structure
Qualified IPO
7. 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 -
series a preferred stock
limited partnerships
Business Summary
leverage buy-out(LBO)
8. 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
Restricted Shares
Conversion Rights
Capital
acquisition
9. 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.
Pre-money valuation
lead investor
Venture Capitalist
Stock Price Agreement
10. 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.
Bridge Financing
Preferred Stock
Pre-Money Valuation
exit
11. 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.
capital under management
Market Capitalization
management buy-out (MBO)
turnaround
12. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Liquidation
Senior Stock
secondary purchase
due diligence
13. Compound internal rate of return.
IRR
equity offerings
Market Capitalization
buyout
14. The method by which an investor will realize an investment.
Capital Call 'Drawdown'
Limited Partnership Agreement
exit route
Term Sheet
15. A business owned by stockholders who share in its profits but are not personally responsible for its debts
IPO(initial public offerings)
Corporation (Limited liability and taxation)
IPO (Initial Public Offering)
buyout
16. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Adjusted Book Value
IPO(initial public offerings)
Anti-Dilution Protections
turnaround
17. 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
Liquidation Preference
Angel Financing
Conversion Rights
18. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Business Plan
Equity
Membership Interest
19. 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.
Common Stock
Deal Structure
C Corporation
follow-on
20. 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
Equity
going private
Subordinated Debt
Private Equity
21. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
buyout
Bridge Financing
Liquidation
Qualified IPO
22. 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
Warrants
Stock Price Agreement
going private
Lead Investor
23. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Business Summary
Liquidation Preference
Warrants
secondary purchase
24. 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.
Restricted Stock
Outstanding Stock
exit route
Common Equity
25. Issue of shares of a company to the public by the company (directly) for the first time.
IPO(initial public offerings)
closing
Liquidity Event
Pre-money valuation
26. This refers to a public offering subsequent to an initial public offering. A secondary public offering can be either an issuer offering or an offering by a group that has purchased the issuer's securities in the public markets.
Dividends
secondary public offering
Liquidation
Business Summary
27. 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.
Restricted Stock
Bootstrapping
Liquidation Preference
Common Stock
28. Corporation's first offer to sell stock to the public - Allows for anyone to buy stock and now falls under the SEC (No longer accredited investor) ...
Initial Public Offering
exit
seed capital
Outstanding Stock
29. 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
corporate venturing
going private
series a preferred stock
Dividends
30. The way you buy stock
General Partner (GP)
Deal Structure
PPM
executive summary
31. Term sheet for equity offering
equity offerings
venture capital
C Corporation
Term Sheet
32. How much the company is worth before an investment
Burn Rate
Pre-Money Valuation
Restricted Shares
syndication
33. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Senior Stock
equity offerings
Initial Public Offering
benchmarks
34. 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.
fund of funds
Membership Interest
Preferred Stock
capital under management
35. 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
Initial Public Offering
seed capital
Business Summary
General Partner (GP)
36. 'I will buy stock at price we negotiate'
benchmarks
management buy-out (MBO)
Stock Price Agreement
Book Value
37. 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
benchmarks
C Corporation
exit route
38. The value at which an asset is carried on a balance sheet (the cost of the item)
Venture Capitalist
Book Value
minority enterprise small business investment companies (MESBICS)
syndication
39. Don't talk to the market about the company
Confidentiality
Elevator Pitch
turnaround
Common Stock
40. How you get to vote
Voting Rights
Private Equity
Limited Partnership Agreement
equity offerings
41. 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.).
Bootstrapping
executive summary
Outstanding Stock
institutional investors
42. 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.
Lead Investor
Liquidation Preference
acquisition
equity financing
43. 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.
lead investor
lock-up period
Voting Rights
capital gain
44. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
exit
Voting Rights
exit route
secondary purchase
45. 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
Confidentiality
Seed Money
equity offerings
secondary purchase
46. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
syndication
NDA (Non-disclosure agreement)
series a preferred stock
IRR
47. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
Capital Call 'Drawdown'
Venture Capitalist
raising capital
48. The practice of a large company taking a minority equity position in a smaller company in a related field.
Common Stock
corporate venturing
Common Stock
debt financing
49. No double tax - Limited number of investors
C Corporation
S Corporation
Lead Investor
Term Sheet
50. A study of the background and financial reliability of the company - management team and industry.
Pre-Money Valuation
Restricted Shares
Due Diligence
capital gain