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Venture Capital

Subject : industries
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 equity ownership in a corporation. Also has basic voting rights






2. The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.






3. 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.






4. Purchase of a business by an outside team of managers who have found financial backers and plan to manage the business actively themselves.






5. 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.






6. The way you buy stock






7. 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.






8. 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.






9. Capital raised for a private company from independently wealthy investors. This capital is generally used as seed financing.






10. An acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business.






11. First to absorb losses. Represents common shareholders' investment in a company. It includes common stock value - retained earnings - capital surplus.






12. 'IOU' for stock - form of equity similar to option allowing the Warrant holder to exercise the Warrant and obtain equity






13. 'I will buy stock at price we negotiate'






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






15. The event in which the company is liquidated or sold (bankruptcy or sale to a public company)






16. The party that manages a limited partnership and is liable for the debts of the company






17. An Agreement made between the investor and the company defining the rights and obligations of the parties involved. The process by which one arrives at the final term and conditions of the investment.






18. A security with limits on its transferability. Usually issued in connection with a private placement






19. 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

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20. 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






21. 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 -






22. The sale or exchange of a significant amount of company ownership for cash - debt - or equity of another company.






23. 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.






24. 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






25. 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






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






27. 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






28. Don't talk to the market about the company






29. The amount of this available to a management team for venture investments.






30. Are the means by which an investor preserves its percentage of ownership in the company without having to make a new investment.






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






32. How much the company is worth before an investment






33. 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) ...






34. The internal rate of return on an investment.






35. Cannot get other outside investors-No Shop






36. 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






37. 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






38. 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.






39. 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.






40. 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






41. 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.






42. 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






43. 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






44. No double tax - Limited number of investors






45. Compound internal rate of return.






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






47. Assets are subject to double taxation - Unlimited number of investors






48. 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






49. 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






50. An investment vehicle designed to invest in a diversified group of investment funds.