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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. 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.
capital under management
follow-on
Capital Commitment
Term Sheet
2. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
corporate venturing
Limited Partnership Agreement
NDA (Non-disclosure agreement)
Anti-Dilution Protections
3. 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.
lock-up period
fund of funds
Capitalization Table
Market Capitalization
4. 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
bridge loans
Dividends
Term Sheet
C Corporation
5. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Private Equity
Membership Interest
Anti-Dilution Protections
management buy-out (MBO)
6. 'I will buy stock at price we negotiate'
Stock Price Agreement
Capital Commitment
Elevator Pitch
term sheet
7. 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
Liquidation Preference
Business Summary
debt financing
IRR
8. 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
Venture Capital Financing
private investment in public equities (PIPE)
portfolio compaay
Limited Partner
9. 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) ...
bridge loans
Initial Public Offering
mezzanine financing
Qualified IPO
10. The method by which an investor will realize an investment.
closing
institutional investors
Bootstrapping
exit route
11. 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
Closing
minority enterprise small business investment companies (MESBICS)
management buy-out (MBO)
12. Pre-money valuation plus the amount invested in the latest round
Post-money
Internal Rate of Return
executive summary
series a preferred stock
13. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
lead investor
fund of funds
limited partnerships
equity offerings
14. 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
IRR
IPO(initial public offerings)
Common Stock
C Corporation
15. Cannot get other outside investors-No Shop
secondary public offering
No Shop/Confidentiality
Warrants
Business Plan
16. Date the LP's subscription is effective and they become partner
Closing
Cash-out election
mezzanine financing
management buy-out (MBO)
17. A study of the background and financial reliability of the company - management team and industry.
C Corporation
Deal Structure
Subordinated Debt
Due Diligence
18. How you get to vote
Bootstrapping
Voting Rights
corporate venturing
acquisition
19. 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
20. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Liquidity Event
Lead Investor
angel investors
21. 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
corporate venturing
IPO (Initial Public Offering)
going private
equity financing
22. The party that manages a limited partnership and is liable for the debts of the company
bridge loans
General Partner (GP)
Post-Money Valuation
Closing
23. 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.
lead investor
benchmarks
corporate venturing
due diligence
24. The amount of this available to a management team for venture investments.
capital under management
venture capital
IRR
bridge loans
25. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Term Sheet
Post-Money Valuation
Angel Financing
C Corporation
26. 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
private investment in public equities (PIPE)
Liquidation Preference
Restricted Stock
benchmarks
27. The equity ownership in a corporation. Also has basic voting rights
Preferred Stock
Term Sheet
series a preferred stock
Common Stock
28. The practice of a large company taking a minority equity position in a smaller company in a related field.
Seed Money
liquidation
IRR
corporate venturing
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
executive summary
Venture Capital Financing
Senior Stock
series a preferred stock
30. 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
executive summary
Preferred Stock
C Corporation
Venture Capital Financing
31. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Pre-money valuation
minority enterprise small business investment companies (MESBICS)
Term Sheet
Corporation (Limited liability and taxation)
32. Issue of shares of a company to the public by the company (directly) for the first time.
Corporation (Limited liability and taxation)
management buy-in (MBI)
IPO(initial public offerings)
PPM
33. Selling an interest in your business to an outside party to raise money.
equity financing
lock-up period
Subordinated Debt
minority enterprise small business investment companies (MESBICS)
34. 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
Preferred Stock
benchmarks
Limited Partner
Corporation (Limited liability and taxation)
35. 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
recapitalization
Cash-out election
secondary public offering
equity offerings
36. 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.).
syndication
portfolio compaay
Limited Partner
institutional investors
37. How you get out
C Corporation
turnaround
Private Equity
Liquidation Preference
38. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Liquidation Preference
Membership Interest
Term Sheet
39. The value at which an asset is carried on a balance sheet (the cost of the item)
Anti-Dilution Protections
Common Stock
Book Value
Burn Rate
40. No double tax - Limited number of investors
S Corporation
PPM
Limited Partnership Agreement
term sheet
41. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
bridge loans
capital gain
acquisition
IRR
42. Investments by a private equity fund in a publicly traded company - usually at a discount.
syndication
return on investment (ROI)
Common Stock
private investment in public equities (PIPE)
43. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
Business Summary
Conversion Rights
Book Value
bridge loans
44. 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
capital gain
follow-on
return on investment (ROI)
Elevator Pitch
45. 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.
Conversion Rights
turnaround
Common Stock
Stock Price Agreement
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.
Capital
syndication
Confidentiality
Burn Rate
47. Compound internal rate of return.
No Shop/Confidentiality
seed capital
IRR
capital under management
48. 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.
benchmarks
Preferred Stock
Deal Structure
Pre-money valuation
49. 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
Stock Price Agreement
Pre-Money Valuation
small business investment companies (SBIC)
General Partner (GP)
50. 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.
private equity
Term Sheet
Limited Partnership Agreement
minority enterprise small business investment companies (MESBICS)