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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. 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.).
IPO (Initial Public Offering)
acquisition
equity offerings
institutional investors
2. 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.
Due Diligence
private equity
Internal Rate of Return
liquidation
3. How you get to vote
going private
Capital Commitment
Voting Rights
term sheet
4. Pre-money valuation plus the amount invested in the latest round
benchmarks
Post-money
mezzanine financing
Liquidation Preference
5. Cannot get other outside investors-No Shop
angel investors
private equity
Senior Stock
No Shop/Confidentiality
6. 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) ...
Capitalization Table
Bridge Financing
Initial Public Offering
Restricted Shares
7. 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
Preferred Stock
Senior Stock
8. The rate of return or profit that an investment is expected to earn.
lock-up period
Limited Partnership Agreement
Restricted Stock
Internal Rate of Return
9. 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
secondary purchase
Outstanding Stock
Capitalization Table
venture capital
10. Selling an interest in your business to an outside party to raise money.
equity financing
Cash-out election
venture capital
Capital Call 'Drawdown'
11. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)
Term Sheet
Liquidity Event
Liquidation Preference
Restricted Stock
12. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
Liquidation
Outstanding Stock
Subordinated Debt
Senior Stock
13. Date the LP's subscription is effective and they become partner
mezzanine financing
Book Value
General Partner (GP)
Closing
14. The total value of the company immediately prior to the latest round of financing
Angel Financing
institutional investors
Pre-money valuation
Restricted Stock
15. 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
Private Equity
Capital
corporate venturing
Lead Investor
16. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.
Term Sheet
Internal Rate of Return
Common Equity
Senior 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
Pre-Money Valuation
seed capital
Angel Financing
Seed Money
18. The company or entity into which a fund invests directly.
portfolio compaay
Liquidity Event
Membership Interest
Capital Call 'Drawdown'
19. An IPO that has met certain
No Shop/Confidentiality
Qualified IPO
return on investment (ROI)
limited partnerships
20. 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
Elevator Pitch
Capital Call 'Drawdown'
Preferred Stock
Venture Capital Financing
21. Don't talk to the market about the company
capital gain
NDA (Non-disclosure agreement)
limited partnerships
Confidentiality
22. Investments by a private equity fund in a publicly traded company - usually at a discount.
Lead Investor
Internal Rate of Return
private investment in public equities (PIPE)
Business Plan
23. 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
Bootstrapping
corporate venturing
Internal Rate of Return
Pre-Money Valuation
24. 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
IRR
Dividends
Seed Money
private equity
25. The rate at which a company expends net cash over a certain period - usually a month.
debt financing
recapitalization
Corporation (Limited liability and taxation)
Burn Rate
26. 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)
Corporation (Limited liability and taxation)
General Partner (GP)
IRR
27. Raising funds by offering ownership in a corporation through the issuing of shares of a corporation's common or preferred stock.
equity offerings
debt financing
exit route
Liquidation Preference
28. 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
exit route
Liquidation Preference
corporate venturing
Preferred Stock
29. The party that manages a limited partnership and is liable for the debts of the company
Venture Capital Financing
capital under management
General Partner (GP)
Pre-Money Valuation
30. 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
Liquidity Event
Common Stock
lead investor
acquisition
31. 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
mezzanine financing
Burn Rate
General Partner (GP)
32. 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.
lock-up period
Preferred Stock
Dividends
Warrants
33. 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.
Capitalization Table
General Partner (GP)
term sheet
NDA (Non-disclosure agreement)
34. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.
Internal Rate of Return
capital gain
Capital
Outstanding Stock
35. 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.
Voting Rights
management buy-out (MBO)
turnaround
term sheet
36. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
Subordinated Debt
Deal Structure
minority enterprise small business investment companies (MESBICS)
Capital Commitment
37. 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.
Post-money
Venture Capitalist
Common Stock
Venture Capital Financing
38. The residual ownership in a company like a corporation or LLC 51%=control
Capitalization Table
Qualified IPO
Equity
Common Stock
39. 'I will buy stock at price we negotiate'
Business Summary
Stock Price Agreement
Anti-Dilution Protections
lead investor
40. 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.
fund of funds
private equity
acquisition
seed capital
41. How much the company is worth before an investment
capital under management
bridge loans
Limited Partnership Agreement
Pre-Money Valuation
42. 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
Subordinated Debt
raising capital
Equity
43. A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investments.
follow-on
Business Summary
IRR
No Shop/Confidentiality
44. The investigation and evaluation of a management team's characteristics - investment philosophy - and terms and conditions prior to committing capital to the fund.
Preferred Stock
Capital Call 'Drawdown'
Equity
due diligence
45. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity
institutional investors
Limited Partnership Agreement
Warrants
series a preferred stock
46. Compound internal rate of return.
Corporation (Limited liability and taxation)
Market Capitalization
IRR
venture capital
47. How you get out
Liquidation Preference
Subordinated Debt
Initial Public Offering
Conversion Rights
48. The method by which an investor will realize an investment.
turnaround
Private Equity
exit route
institutional investors
49. 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
Lead Investor
Capital Commitment
Venture Capitalist
private investment in public equities (PIPE)
50. The first round of stock offered during the seed or early stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of pref
series a preferred stock
Corporation (Limited liability and taxation)
Membership Interest
Senior Stock