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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
benchmarks
Series A Preferred Stock
private investment in public equities (PIPE)
Restricted Stock
2. 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.
PPM
Business Summary
acquisition
syndication
3. 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
Common Stock
Seed Money
Preferred Stock
Voting Rights
4. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Series A Preferred Stock
Liquidity Event
mezzanine financing
Internal Rate of Return
5. 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
Capital Call 'Drawdown'
Capitalization Table
Preferred Stock
Business Plan
6. 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
liquidation
lead investor
Venture Capitalist
series a preferred stock
7. 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
Voting Rights
Capital Call 'Drawdown'
Membership Interest
8. 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
9. 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.
Liquidation Preference
Pre-money valuation
minority enterprise small business investment companies (MESBICS)
raising capital
10. 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.
Subordinated Debt
Limited Partner
lock-up period
raising capital
11. Date the LP's subscription is effective and they become partner
Post-Money Valuation
Series A Preferred Stock
Closing
private equity
12. A business owned by stockholders who share in its profits but are not personally responsible for its debts
Restricted Stock
Corporation (Limited liability and taxation)
follow-on
Series A Preferred Stock
13. 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
Preferred Stock
going private
No Shop/Confidentiality
Liquidity Event
14. 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) ...
lead investor
Initial Public Offering
Corporation (Limited liability and taxation)
Closing
15. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
secondary purchase
Capital
Liquidation Preference
Term Sheet
16. No double tax - Limited number of investors
Initial Public Offering
Venture Capital Financing
limited partnerships
S Corporation
17. 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.
Dividends
Venture Capital Financing
Common Stock
Market Capitalization
18. Also called a 'Cap Table' - this is a table showing the total amount of the various securities issued by a firm. This typically includes the amount of investment obtained from each source and the securities distributed -- e.g. common and preferred s
liquidation
Capitalization Table
Business Plan
Stock Price Agreement
19. An investment vehicle designed to invest in a diversified group of investment funds.
acquisition
debt financing
fund of funds
Angel Financing
20. 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
exit
Pre-Money Valuation
Burn Rate
Dividends
21. 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
Qualified IPO
executive summary
Venture Capitalist
IPO (Initial Public Offering)
22. This refers to obtaining capital from investors or venture capital sources.
raising capital
Limited Partner
Conversion Rights
leverage buy-out(LBO)
23. The maximum amount of cash that a partner is required to contribute under the terms
Capital Commitment
closing
Warrants
Liquidity Event
24. 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
Warrants
No Shop/Confidentiality
private equity
25. A security with limits on its transferability. Usually issued in connection with a private placement
acquisition
S Corporation
Restricted Stock
institutional investors
26. 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.).
closing
IPO(initial public offerings)
venture capital
institutional investors
27. 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
Market Capitalization
IPO (Initial Public Offering)
angel investors
Preferred Stock
28. The company or entity into which a fund invests directly.
portfolio compaay
corporate venturing
limited partnerships
lead investor
29. The party that manages a limited partnership and is liable for the debts of the company
Common Equity
Corporation (Limited liability and taxation)
General Partner (GP)
exit route
30. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock
lock-up period
benchmarks
Corporation (Limited liability and taxation)
Conversion Rights
31. A study of the background and financial reliability of the company - management team and industry.
Deal Structure
Limited Partner
Due Diligence
turnaround
32. 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
Senior Stock
Pre-Money Valuation
IRR
debt financing
33. Assets are subject to double taxation - Unlimited number of investors
Common Stock
buyout
C Corporation
Corporation (Limited liability and taxation)
34. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
angel investors
fund of funds
Business Summary
Term Sheet
35. 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
General Partner (GP)
buyout
Private Equity
private investment in public equities (PIPE)
36. The practice of a large company taking a minority equity position in a smaller company in a related field.
corporate venturing
Adjusted Book Value
Liquidity Event
Restricted Shares
37. The residual ownership in a company like a corporation or LLC 51%=control
Dividends
Equity
Limited Partner
Liquidation Preference
38. 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.
Burn Rate
liquidation
Venture Capital Financing
Book Value
39. Pre-money valuation plus the amount invested in the latest round
institutional investors
private investment in public equities (PIPE)
secondary purchase
Post-money
40. 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.
Capital
Venture Capitalist
Preferred Stock
term sheet
41. 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.
Common Stock
Elevator Pitch
fund of funds
syndication
42. The equity ownership in a corporation. Also has basic voting rights
Common Stock
Pre-Money Valuation
lock-up period
Common Equity
43. The internal rate of return on an investment.
return on investment (ROI)
Bridge Financing
Outstanding Stock
Preferred Stock
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
Elevator Pitch
Initial Public Offering
portfolio compaay
45. An IPO that has met certain
corporate venturing
institutional investors
Qualified IPO
Voting Rights
46. 'I will buy stock at price we negotiate'
Stock Price Agreement
going private
recapitalization
bridge loans
47. 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.
Preferred Stock
Restricted Stock
Common Equity
Confidentiality
48. 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
institutional investors
management buy-out (MBO)
Preferred Stock
49. 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
bridge loans
Due Diligence
Qualified IPO
Angel Financing
50. How you get out
Deal Structure
closing
Capital
Liquidation Preference