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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. Cannot get other outside investors-No Shop
buyout
Bridge Financing
S Corporation
No Shop/Confidentiality
2. Issue of shares of a company to the public by the company (directly) for the first time.
Restricted Shares
secondary public offering
private investment in public equities (PIPE)
IPO(initial public offerings)
3. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
closing
Business Summary
Restricted Shares
Burn Rate
4. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
fund of funds
turnaround
exit route
5. 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) ...
secondary purchase
Anti-Dilution Protections
Initial Public Offering
IPO (Initial Public Offering)
6. 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
Preferred Stock
turnaround
Term Sheet
Capital Call 'Drawdown'
7. 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.
syndication
going private
Pre-money valuation
Anti-Dilution Protections
8. 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
due diligence
IPO(initial public offerings)
PPM
9. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.
management buy-in (MBI)
small business investment companies (SBIC)
General Partner (GP)
going private
10. The valuation of a company prior to a round of investment. This amount is determined by using various calculation models - such as discounted P/E ratios multiplied by periodic earnings or a multiple times a future cash flow discounted to a present c
Business Summary
Pre-Money Valuation
Seed Money
recapitalization
11. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Term Sheet
Senior Stock
limited partnerships
Liquidation Preference
12. 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.
buyout
Preferred Stock
Due Diligence
Subordinated Debt
13. 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
term sheet
Capital Commitment
Warrants
Venture Capitalist
14. 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
Limited Partnership Agreement
Restricted Shares
Cash-out election
secondary public offering
15. 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.
Angel Financing
minority enterprise small business investment companies (MESBICS)
private equity
Due Diligence
16. The value at which an asset is carried on a balance sheet (the cost of the item)
series a preferred stock
Bridge Financing
Book Value
IRR
17. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
Pre-Money Valuation
Senior Stock
exit
capital gain
18. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Adjusted Book Value
Pre-Money Valuation
IRR
Preferred Stock
19. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.
Outstanding Stock
private equity
Term Sheet
Anti-Dilution Protections
20. This refers to obtaining capital from investors or venture capital sources.
portfolio compaay
raising capital
management buy-out (MBO)
Market Capitalization
21. 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
Cash-out election
Preferred Stock
Initial Public Offering
Pre-Money Valuation
22. An agreement issued by entrepreneurs to potential investors to protect the privacy of their ideas when disclosing those ideas to third parties.
Book Value
NDA (Non-disclosure agreement)
debt financing
equity financing
23. 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.
Adjusted Book Value
secondary public offering
seed capital
recapitalization
24. 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
management buy-out (MBO)
Seed Money
Series A Preferred Stock
Capital Commitment
25. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Bridge Financing
buyout
lead investor
Preferred Stock
26. 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.
liquidation
term sheet
Term Sheet
turnaround
27. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
Warrants
Subordinated Debt
capital under management
corporate venturing
28. 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.
fund of funds
Bridge Financing
General Partner (GP)
private equity
29. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Corporation (Limited liability and taxation)
acquisition
secondary public offering
PPM
30. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
C Corporation
small business investment companies (SBIC)
Common Equity
debt financing
31. Investments by a private equity fund in a publicly traded company - usually at a discount.
private equity
private investment in public equities (PIPE)
management buy-out (MBO)
Burn Rate
32. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
Common Stock
institutional investors
Book Value
33. 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
Private Equity
Series A Preferred Stock
Post-Money Valuation
S Corporation
34. 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
Closing
going private
Adjusted Book Value
acquisition
35. 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
Restricted Stock
debt financing
Bridge Financing
IPO(initial public offerings)
36. 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
Business Plan
bridge loans
C Corporation
Restricted Stock
37. 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
exit route
Burn Rate
IPO (Initial Public Offering)
capital gain
38. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
Restricted Stock
Deal Structure
Private Equity
39. 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.
lock-up period
Deal Structure
lead investor
Preferred Stock
40. An investment vehicle designed to invest in a diversified group of investment funds.
Corporation (Limited liability and taxation)
fund of funds
debt financing
Outstanding Stock
41. 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.
buyout
turnaround
debt financing
Preferred Stock
42. The equity ownership in a corporation. Also has basic voting rights
Confidentiality
PPM
angel investors
Common Stock
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.).
Equity
exit
institutional investors
Book Value
44. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Voting Rights
Liquidity Event
Anti-Dilution Protections
Initial Public Offering
45. The method by which an investor will realize an investment.
Business Summary
return on investment (ROI)
Closing
exit route
46. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
angel investors
series a preferred stock
Capital Commitment
equity offerings
47. How you get out
raising capital
executive summary
Liquidation Preference
lead investor
48. 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
seed capital
raising capital
Lead Investor
benchmarks
49. A study of the background and financial reliability of the company - management team and industry.
Capitalization Table
Outstanding Stock
Due Diligence
Limited Partnership Agreement
50. How much the company is worth before an investment
Pre-Money Valuation
Common Stock
closing
acquisition