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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 brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Bootstrapping
Capital
Pre-Money Valuation
Business Summary
2. 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
equity offerings
Common Stock
IPO(initial public offerings)
Elevator Pitch
3. Issue of shares of a company to the public by the company (directly) for the first time.
Capitalization Table
Restricted Stock
IRR
IPO(initial public offerings)
4. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Internal Rate of Return
Corporation (Limited liability and taxation)
Capital Commitment
Qualified IPO
5. Don't talk to the market about the company
Confidentiality
lock-up period
Common Stock
Term Sheet
6. 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
Market Capitalization
Elevator Pitch
Due Diligence
Liquidity Event
7. An investment vehicle designed to invest in a diversified group of investment funds.
fund of funds
portfolio compaay
Elevator Pitch
Book Value
8. Assets are subject to double taxation - Unlimited number of investors
C Corporation
Book Value
Seed Money
capital gain
9. 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
Anti-Dilution Protections
Post-Money Valuation
benchmarks
capital gain
10. Selling an interest in your business to an outside party to raise money.
Outstanding Stock
syndication
equity financing
S Corporation
11. 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.).
Post-money
management buy-in (MBI)
institutional investors
Restricted Shares
12. 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
secondary public offering
mezzanine financing
lead investor
bridge loans
13. 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
Closing
PPM
Preferred Stock
Anti-Dilution Protections
14. An IPO that has met certain
exit route
Stock Price Agreement
Qualified IPO
Preferred Stock
15. 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
closing
syndication
follow-on
16. A security with limits on its transferability. Usually issued in connection with a private placement
mezzanine financing
secondary purchase
Equity
Restricted Stock
17. 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
Term Sheet
seed capital
Business Plan
acquisition
18. The party that manages a limited partnership and is liable for the debts of the company
benchmarks
Limited Partner
General Partner (GP)
Subordinated Debt
19. 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.
Book Value
raising capital
Common Stock
turnaround
20. The equity ownership in a corporation. Also has basic voting rights
Common Stock
management buy-out (MBO)
equity financing
small business investment companies (SBIC)
21. How much the company is worth before an investment
IRR
closing
bridge loans
Pre-Money Valuation
22. How you get out
Post-money
Membership Interest
Liquidation Preference
Stock Price Agreement
23. A study of the background and financial reliability of the company - management team and industry.
benchmarks
lock-up period
Due Diligence
Bridge Financing
24. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
term sheet
Conversion Rights
Confidentiality
capital gain
25. 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.
Warrants
minority enterprise small business investment companies (MESBICS)
Dividends
buyout
26. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
Initial Public Offering
Liquidation Preference
debt financing
27. No double tax - Limited number of investors
IRR
S Corporation
lock-up period
fund of funds
28. 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.
minority enterprise small business investment companies (MESBICS)
bridge loans
Preferred Stock
Liquidation Preference
29. 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
Limited Partner
recapitalization
management buy-in (MBI)
Bridge Financing
30. 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
bridge loans
executive summary
acquisition
31. 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.
Deal Structure
Subordinated Debt
seed capital
management buy-out (MBO)
32. 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.
going private
IRR
secondary public offering
equity financing
33. The total value of the company immediately prior to the latest round of financing
Dividends
Liquidity Event
Business Summary
Pre-money valuation
34. A detailed document that outlines what you are going to do and how you are going to do it - including a clear and simple discussion of the idea; the management team - including full resumes; business strategy; marketing plan - including sales projec
No Shop/Confidentiality
Business Plan
Initial Public Offering
Capital Commitment
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.
Bootstrapping
Senior Stock
seed capital
Closing
36. Pre-money valuation plus the amount invested in the latest round
Preferred Stock
equity offerings
Common Stock
Post-money
37. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Anti-Dilution Protections
bridge loans
syndication
Post-money
38. 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
Burn Rate
venture capital
Qualified IPO
Restricted Shares
39. Investments by a private equity fund in a publicly traded company - usually at a discount.
Restricted Stock
Private Equity
minority enterprise small business investment companies (MESBICS)
private investment in public equities (PIPE)
40. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Term Sheet
Restricted Stock
NDA (Non-disclosure agreement)
Subordinated Debt
41. 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
corporate venturing
Venture Capitalist
mezzanine financing
Preferred Stock
42. Letter of intent summarizing the key legal and financial terms
angel investors
Term Sheet
private investment in public equities (PIPE)
Voting Rights
43. The equity ownership in a LLC. May be either common or preferred. Partnership agreement
Membership Interest
Warrants
buyout
going private
44. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
No Shop/Confidentiality
due diligence
Venture Capital Financing
Bridge Financing
45. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
General Partner (GP)
Term Sheet
Anti-Dilution Protections
buyout
46. Cannot get other outside investors-No Shop
No Shop/Confidentiality
executive summary
C Corporation
Outstanding Stock
47. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.
Equity
leverage buy-out(LBO)
Pre-Money Valuation
Term Sheet
48. The rate at which a company expends net cash over a certain period - usually a month.
Post-money
private investment in public equities (PIPE)
Confidentiality
Burn Rate
49. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
fund of funds
term sheet
equity offerings
private investment in public equities (PIPE)
50. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
equity offerings
Limited Partnership Agreement
syndication
angel investors