Test your basic knowledge |

Venture Capital

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 maximum amount of cash that a partner is required to contribute under the terms






2. 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.






3. 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






4. 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






5. When an investor sells a stock - bond or mutual fund at a higher price than he or she paid for it.






6. 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


7. 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






8. 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






9. 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






10. The rate at which a company expends net cash over a certain period - usually a month.






11. The practice of a large company taking a minority equity position in a smaller company in a related field.






12. A business owned by stockholders who share in its profits but are not personally responsible for its debts






13. Funds provided to enable an enterprise to acquire another enterprise or product line or business.






14. 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.






15. 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.






16. 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.






17. The company or entity into which a fund invests directly.






18. 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.






19. This refers to a synopsis of the key points of a business plan.






20. 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






21. The total value of the company immediately prior to the latest round of financing






22. 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






23. 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






24. Unsecured debt - junior to senior debt (bank loan) and is senior to common stock and preferred. Gets paid last






25. Most senior form of debt and is usually secured by the assets of the company. Cannot vote on anything






26. 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






27. 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.






28. 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.






29. The rate of return or profit that an investment is expected to earn.






30. 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






31. An IPO that has met certain






32. No double tax - Limited number of investors






33. The internal rate of return on an investment.






34. Pre-money valuation plus the amount invested in the latest round






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.






36. Force sell of stock at a predetermined price. The rights by which the investor's preferred stock or subordinated debt 'converts' into common stock






37. How much the company is worth before an investment






38. 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 -






39. 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






40. 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.).






41. 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






42. Purchase of stock in a company from a share holder - rather than purchasing stock directly from the company.






43. Cannot get other outside investors-No Shop






44. The value at which an asset is carried on a balance sheet (the cost of the item)






45. This refers to obtaining capital from investors or venture capital sources.






46. The way you buy stock






47. Selling an interest in your business to an outside party to raise money.






48. Date the LP's subscription is effective and they become partner






49. Compound internal rate of return.






50. 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