Test your basic knowledge |

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. 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.






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






3. The way you buy stock






4. 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






5. 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.






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






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






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






9. Document between general and limited partnership of each fund spells out details of the partnership.






10. 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.






11. 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.






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






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






14. 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






15. 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.






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






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






18. 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






19. 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






20. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.






21. 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






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






23. 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






24. 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.






25. 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.






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






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






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






29. 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.






30. Equity securities of companies that have not 'gone public' (are not listed on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are not listed on an exchange - any investor wishing to sell






31. 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






32. 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






33. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






34. 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






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






36. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)






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






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






39. 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.






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






41. 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






42. 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.






43. 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.).






44. 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






45. 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






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






47. 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






48. How you get out






49. 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.






50. How you get to vote