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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. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Venture Capital Financing
Capital Commitment
Liquidation Preference
buyout
2. The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a partnership agreement. The agreement also covers -
secondary public offering
turnaround
Post-Money Valuation
limited partnerships
3. 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)
series a preferred stock
minority enterprise small business investment companies (MESBICS)
Capital Commitment
4. 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
Burn Rate
turnaround
Common Stock
Pre-Money Valuation
5. How much the company is worth before an investment
mezzanine financing
Pre-Money Valuation
Burn Rate
Lead Investor
6. How you get to vote
IPO(initial public offerings)
IPO (Initial Public Offering)
angel investors
Voting Rights
7. The equity ownership in a corporation. Also has basic voting rights
syndication
Post-Money Valuation
turnaround
Common Stock
8. The maximum amount of cash that a partner is required to contribute under the terms
exit route
Capital Commitment
General Partner (GP)
portfolio compaay
9. These are equity securities of companies that have not 'gone public' (in other words - companies that have not listed their stock on a public exchange). Private equities are generally illiquid and thought of as a long-term investment. As they are no
lead investor
private equity
Due Diligence
Preferred Stock
10. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Pre-Money Valuation
Subordinated Debt
Restricted Shares
Restricted Stock
11. A brief statement covering the main points that includes a discussion of management - profits - strategic position - and exit plan
Pre-Money Valuation
Business Summary
IPO(initial public offerings)
Anti-Dilution Protections
12. 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
Common Stock
Burn Rate
Liquidation
13. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
Closing
Pre-Money Valuation
angel investors
Common Equity
14. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
going private
Initial Public Offering
Common Equity
Bootstrapping
15. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
Deal Structure
Due Diligence
equity offerings
Market Capitalization
16. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
Liquidation
closing
Liquidation Preference
Bridge Financing
17. Assets are subject to double taxation - Unlimited number of investors
Angel Financing
C Corporation
Preferred Stock
follow-on
18. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
return on investment (ROI)
Qualified IPO
secondary purchase
Capital
19. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
term sheet
Common Equity
Post-Money Valuation
20. 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
Cash-out election
fund of funds
Post-Money Valuation
Corporation (Limited liability and taxation)
21. 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.
acquisition
going private
corporate venturing
liquidation
22. The residual ownership in a company like a corporation or LLC 51%=control
Initial Public Offering
return on investment (ROI)
Capital Call 'Drawdown'
Equity
23. 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
Capital Commitment
secondary public offering
capital gain
Private Equity
24. 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
lead investor
Subordinated Debt
Restricted Shares
executive summary
25. The amount to be paid when the company is liquidated or sold before any payments are made lower classes of investors. Not everyone gets paid equally
fund of funds
Common Stock
Liquidation Preference
Term Sheet
26. 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
debt financing
going private
Seed Money
turnaround
27. Used to compute net worth as the difference between total assets and total liabilities. adjusted value up to reflect market value
Membership Interest
follow-on
minority enterprise small business investment companies (MESBICS)
Adjusted Book Value
28. 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
Capital
Voting Rights
Pre-money valuation
bridge loans
29. How you get out
Warrants
Pre-Money Valuation
Liquidation Preference
Burn Rate
30. 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.
IRR
NDA (Non-disclosure agreement)
Bridge Financing
return on investment (ROI)
31. A study of the background and financial reliability of the company - management team and industry.
IPO(initial public offerings)
Due Diligence
Term Sheet
equity financing
32. Pre-money valuation plus the amount invested in the latest round
minority enterprise small business investment companies (MESBICS)
Limited Partnership Agreement
Post-money
leverage buy-out(LBO)
33. 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.
capital under management
executive summary
lead investor
Bridge Financing
34. 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.
Closing
capital gain
term sheet
Limited Partner
35. The method by which an investor will realize an investment.
IRR
Deal Structure
Limited Partner
exit route
36. The equity of the company and some types of debts (subordinated debt) but generally not senior secured debt (bank loan)
Capital
Business Plan
capital gain
NDA (Non-disclosure agreement)
37. 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.
Outstanding Stock
Subordinated Debt
liquidation
turnaround
38. 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
Pre-money valuation
debt financing
private investment in public equities (PIPE)
Limited Partner
39. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
exit
recapitalization
Warrants
capital gain
40. Document between general and limited partnership of each fund spells out details of the partnership.
Dividends
NDA (Non-disclosure agreement)
IPO(initial public offerings)
Limited Partnership Agreement
41. 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
Senior Stock
Elevator Pitch
Initial Public Offering
Lead Investor
42. Issue of shares of a company to the public by the company (directly) for the first time.
corporate venturing
mezzanine financing
Common Stock
IPO(initial public offerings)
43. Cannot get other outside investors-No Shop
IRR
IPO (Initial Public Offering)
Market Capitalization
No Shop/Confidentiality
44. The practice of a large company taking a minority equity position in a smaller company in a related field.
term sheet
corporate venturing
Due Diligence
benchmarks
45. A business owned by stockholders who share in its profits but are not personally responsible for its debts
venture capital
lead investor
Initial Public Offering
Corporation (Limited liability and taxation)
46. Letter of intent summarizing the key legal and financial terms
Equity
buyout
Term Sheet
management buy-out (MBO)
47. 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.
Venture Capitalist
recapitalization
institutional investors
Seed Money
48. 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
turnaround
Dividends
follow-on
small business investment companies (SBIC)
49. 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
50. 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.).
Initial Public Offering
Venture Capital Financing
institutional investors
venture capital