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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. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.
exit
Qualified IPO
Warrants
capital gain
2. 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
Capital Commitment
syndication
Capitalization Table
Voting Rights
3. The total value of the company immediately prior to the latest round of financing
IRR
Pre-money valuation
Term Sheet
Cash-out election
4. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.
Angel Financing
NDA (Non-disclosure agreement)
raising capital
Capital Call 'Drawdown'
5. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything
S Corporation
equity financing
Common Stock
Senior Stock
6. 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
series a preferred stock
term sheet
syndication
small business investment companies (SBIC)
7. 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.
equity offerings
term sheet
IPO (Initial Public Offering)
turnaround
8. Date the LP's subscription is effective and they become partner
Series A Preferred Stock
Term Sheet
Limited Partner
Closing
9. The rate at which a company expends net cash over a certain period - usually a month.
Burn Rate
Post-money
Deal Structure
Pre-money valuation
10. 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.
bridge loans
Restricted Stock
liquidation
debt financing
11. 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
12. 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) ...
Initial Public Offering
Common Stock
Bridge Financing
Anti-Dilution Protections
13. 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
exit route
limited partnerships
benchmarks
Corporation (Limited liability and taxation)
14. Investments by a private equity fund in a publicly traded company - usually at a discount.
Burn Rate
Anti-Dilution Protections
lock-up period
private investment in public equities (PIPE)
15. An IPO that has met certain
Qualified IPO
Dividends
IPO (Initial Public Offering)
lead investor
16. No double tax - Limited number of investors
exit route
S Corporation
Venture Capitalist
liquidation
17. Term sheet for equity offering
return on investment (ROI)
small business investment companies (SBIC)
Term Sheet
Burn Rate
18. The practice of a large company taking a minority equity position in a smaller company in a related field.
Pre-money valuation
going private
IPO(initial public offerings)
corporate venturing
19. 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
Bootstrapping
Adjusted Book Value
series a preferred stock
private investment in public equities (PIPE)
20. The company or entity into which a fund invests directly.
corporate venturing
private investment in public equities (PIPE)
portfolio compaay
Internal Rate of Return
21. How you get out
private equity
venture capital
Cash-out election
Liquidation Preference
22. How fast you can turn it into cash - termination of a business operation by using its assets to discharge its liabilities
IRR
Voting Rights
bridge loans
Liquidation
23. 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
leverage buy-out(LBO)
Elevator Pitch
Outstanding Stock
lock-up period
24. 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
Post-money
raising capital
Membership Interest
25. How much the company is worth before an investment
equity offerings
Liquidation Preference
Liquidation
Pre-Money Valuation
26. 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
bridge loans
exit
Restricted Shares
Angel Financing
27. Selling an interest in your business to an outside party to raise money.
Limited Partnership Agreement
equity financing
recapitalization
Stock Price Agreement
28. 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
Pre-Money Valuation
leverage buy-out(LBO)
Corporation (Limited liability and taxation)
mezzanine financing
29. 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
Bootstrapping
equity financing
private equity
Liquidation Preference
30. 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.
Common Equity
lock-up period
limited partnerships
Preferred Stock
31. 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.
management buy-out (MBO)
C Corporation
Cash-out election
PPM
32. Issue of shares of a company to the public by the company (directly) for the first time.
follow-on
IPO(initial public offerings)
Preferred Stock
benchmarks
33. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last
No Shop/Confidentiality
Liquidity Event
Subordinated Debt
Cash-out election
34. This refers to obtaining capital from investors or venture capital sources.
raising capital
No Shop/Confidentiality
Restricted Stock
Limited Partnership Agreement
35. Assets are subject to double taxation - Unlimited number of investors
C Corporation
syndication
PPM
management buy-in (MBI)
36. 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
Preferred Stock
Post-Money Valuation
Adjusted Book Value
buyout
37. Financing for a company expecting to go public usually within 6-12 months; usually so structured to be repaid from proceeds of a public offerings - or to establish floor price for public offer.
IRR
mezzanine financing
Deal Structure
Anti-Dilution Protections
38. 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.
Post-Money Valuation
IRR
leverage buy-out(LBO)
turnaround
39. A study of the background and financial reliability of the company - management team and industry.
Due Diligence
going private
bridge loans
Elevator Pitch
40. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.
Stock Price Agreement
secondary purchase
Capital Call 'Drawdown'
small business investment companies (SBIC)
41. The value at which an asset is carried on a balance sheet (the cost of the item)
NDA (Non-disclosure agreement)
seed capital
Book Value
fund of funds
42. The final event to complete the investment - at which time all the legal documents are signed and the funds are transferred.
lead investor
closing
lock-up period
Adjusted Book Value
43. Compound internal rate of return.
IRR
equity offerings
exit route
Voting Rights
44. 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.
Elevator Pitch
recapitalization
liquidation
term sheet
45. 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.
Membership Interest
C Corporation
Corporation (Limited liability and taxation)
Preferred Stock
46. Individuals that provide venture capital to seed or early stage companies. They can usually add value through their contracts and expertise.
bridge loans
angel investors
Pre-Money Valuation
Seed Money
47. 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.
Due Diligence
leverage buy-out(LBO)
secondary public offering
Common Equity
48. The residual ownership in a company like a corporation or LLC 51%=control
small business investment companies (SBIC)
Equity
IPO(initial public offerings)
Pre-Money Valuation
49. Funds provided to enable an enterprise to acquire another enterprise or product line or business.
Business Plan
Preferred Stock
buyout
PPM
50. 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
Bridge Financing
Voting Rights
IPO (Initial Public Offering)
Cash-out election